When a trust is created, the person by whom it is created (the ‘settlor’) transfers the legal interest in the assets to the trustees, whereas the beneficial interest passes to the beneficiary of the trust. The legal interest is a right in property, governed by statute and common law, as opposed to the beneficial interest which is a right in property governed by the law of equity.
The settler no longer has either legal or beneficial ownership of the assets which do not pass to his personal representatives when he dies.
Trusts may be created:
•inter vivos (i.e. during the settlor’s lifetime);
•by will or codicil (on the death of the testator);