What is an employee benefit trust?

Produced in partnership with Jeremy Glover (Share Schemes)

Practice notes

What is an employee benefit trust?

Produced in partnership with Jeremy Glover (Share Schemes)

Practice notes

The EBT as a trust

An employee benefit trust (EBT) is a form of trust. A trust refers to the legal relationship created by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.

A trust (including an EBT) generally has the following characteristics:

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the assets constitute a separate fund and are not a part of the trustee’s own estate
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title to the trust assets stands in the name of the trustee, and
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the trustee has the power and the duty, in respect of which it is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon it by law

As a general rule, a trust (including an EBT) must have certainty of objects, and in the case of non-charitable trusts such as an EBT, there must be someone in whose favour the court can enforce the trust. It is settled law

Jeremy Glover (Share Schemes)

Jeremy is a senior incentives lawyer who has over 18 years' experience advising businesses on their employee and executive incentives and share plans. Jeremy's practice focuses on the field of remuneration, executive pay, employee share plans and management buyouts. Jeremy advises a broad range of clients including multinationals, quoted companies, privately owned companies (family, owner-managed businesses, venture capital backed and private equity backed). He also provides specialist expert advice to other professional advisers such as accountants, tax advisers and remuneration consultants for their clients. Jeremy has worked in private practice and in-house and enjoys advising clients using the benefit of both perspectives. Jeremy used to head up the incentives practices at Reed Smith LLP, Stephenson Harwood LLP and the Entrepreneurial Group at EY in London. Jeremy is now a senior consultant to a number of law and accounting firms including Reed Smith LLP, PWT Advice LLP and Jurit LLP. Jeremy is also the CEO of start-up 6S Infinity LLP which, inter alia, provides legal documentation services. Jeremy has a first class LLB from Exeter University and a first class MBA from Cass Business School.

Jurisdiction(s):

United Kingdom

Key definition:

Employee Benefit Trust definition

What does Employee Benefit Trust mean?

EBT is an acronym for ‘employee benefit trust’, which is a type of discretionary trust which is set up primarily for the benefit of employees and former employees of a company (or parent company) and those of its subsidiaries and certain dependents.

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