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Trusts and Estate Planning

When you form a trust, you actually become four different people.

  • You as a person whose financial affairs are entirely separate from those of the trust.
  • You as the founder, the person who forms the trust and who has to agree to any changes to the trust deed.
  • You as one of the trustees who will manage the trust for the benefit of the beneficiaries.
  • You as one of the beneficiaries who may benefit from distributions by the trustees.

What is important is that you cannot be two or more of these people at the same time. If you are acting as one of them, then you cannot simultaneously act as another.

That might seem contradictory because occasionally you will sign a document as the founder and again as a trustee, but notice that I said “again as” and not “as well as”. So, you sign as the founder, then you “take off your founder hat”, and “put on your trustee hat” then sign again.

In my view, you simply must be a trustee and a beneficiary. Why?

  • A trustee because you want to make sure that the trustees do what you want them to do.
  • A beneficiary because you don’t know whether, in the future, you may need some money from the trust.

Being the founder is not so important, because all a founder can do is block changes to the trust deed. Nothing else.

However, it is more convenient for you to act as the founder because it limits the number of people involved.


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