What a trust is, in one page

People hear the word trust and picture something for other people. Old families, big lawyers, a lot of paperwork. So they put it off, and then one day something happens that a trust would have handled quietly, and it is handled loudly instead.

Here is what a trust is, in plain words, and when it is worth the bother.

The idea

A trust is a way of separating three things that we usually keep together: owning something, looking after it, and benefiting from it.

Normally, if you own a house, you look after it and you enjoy it. With a trust, you hand the house to someone whose only job is to look after it, called the trustee, with written instructions about who it is for, called the beneficiaries. You can still be one of those people. You can still, within limits, be the one giving the instructions.

That is the whole idea. Everything else is detail.

Why anyone does this

Three reasons come up again and again at the tables I sit at.

Continuity. If you die, or lose capacity, the trustee carries on. Nothing is frozen while courts in two countries work out who is in charge. The children's school fees get paid next month, as they did last month.

Protection. Assets in a well-made trust are not yours in the way your bank account is yours. A business going wrong, a divorce, a claim from somewhere you did not expect: the trust sits outside it. This is the reason people talk about most and the one that needs the most care, because a trust made in a hurry, or made too late, does not protect anything.

Order. A trust can say what a will cannot easily say. This child gets an income, not a lump sum, until they are thirty. This house stays in the family. This share of the business goes to whoever is running it, not whoever is eldest.

When it is not worth it

If everything you own is in one country, your family is straightforward, and your will is up to date, you may not need one. A trust costs money to set up and money every year to run. It adds a layer between you and your things, and some people find that layer uncomfortable even when it is doing exactly what they asked.

I say this to families more often than you would think. Not every family needs one. Every family needs to have decided.

The questions to ask

If you are talking to someone about setting one up, and you should not do it alone, these are the questions that matter.

• Where will the trust be, and does that place respect trusts? Some countries do not.
• Who is the trustee, and what happens if they retire, die, or go wrong?
• What can I still decide, and what have I given up?
• What does it cost to run, every year, for the next twenty years?
• If I want to change my mind, can I?

If you get clear answers to those five, you are most of the way there.