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A trust is an arrangement whereby one person, known as the settlor, transfers money or other assets to another person, known as the trustee, to hold for the benefit of persons, who are known as the beneficiaries. Often, beneficiaries will be members of the settlor's family but the settlor can name anyone (including themselves) as a beneficiary. However, there are often punitive tax consequences for settlors being beneficiaries (a 'settlor-interested' trust) and so this is often discouraged.

A trust has no legal identity and so it is the trustees who own the assets and carry out the activities of the trust.

A trust can be created verbally, although it is usually formalised by way of a 'deed of trust' or 'declaration of trust'. This could be done during the individual's lifetime or by their will – see UK3.4.

The categorisation of trusts is problematic. They can be categorised