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Definitions relating to trusts

There is no legal definition of 'trust'. The working definition followed by HMRC¹ defines a trust as an obligation binding a person (called the trustee) to hold or deal with property for the benefit of another person or class of persons (of which they may be a member). The word is often used interchangeably with 'settlement'², although a trust is really a type of settlement. A settlement is broadly an arrangement that creates an interest in property for beneficiaries, without giving them the legal interest.

In this Division, references to a trust do not include unit trusts or venture capital trusts.

A trust is most often constituted by deed, by Will or by an order of the court. There are only a few specific circumstances where HMRC will ask to see trust deeds, such as during an enquiry³.

Express words are not necessary for a trust's creation, nor indeed any writing, though