settlors

A settlor is a person who creates a trust by transferring property to a trustee and expressing the intention to hold the property on trust for the benefit of others. The term is common in common-law jurisdictions, where the settlor may also be described as the founder, trustor, or grantor of the trust. The settlor’s act is the starting point of the fiduciary relationship that governs the trust.

Creation and elements: For a valid trust, the settlor must have the capacity to create it, intend to create a trust, and settle identifiable property on terms that define the beneficiaries or the purpose of the trust. The trust deed or will typically sets out the rights and duties of the trustee, the scope of the trustee’s powers, and the distribution rules. In some cases the trust is created by a declaration of trust instead of a separate settlement of property. The property placed in the trust is held by the trustee to be managed and distributed according to the settlor’s directions.

Types and variations: Trusts created during the settlor’s lifetime are inter vivos trusts; those created by will are testamentary trusts. Trusts can be revocable (the settlor can alter or revoke the trust) or irrevocable. They may be discretionary, giving the trustee discretion to distribute among beneficiaries, or fixed, with specified beneficiaries and fixed shares. In some jurisdictions a settlor may also be a beneficiary (self-settled trusts), though protections and rules vary.

Relations and duties: Once created, the trustee administers the trust according to the settlor’s terms. The settlor’s ongoing role is typically limited to powers reserved in the trust instrument, such as appointing or removing trustees or modifying terms, subject to legal limits.