Is a contract/instrument between a person called settlor and a person called trustee pursuant to which obligation is entrusted by the settlor onto the trustee to deal with property of the settlor for the benefit of persons called beneficiaries in accordance with the terms and conditions contained in the contract/instrument.
The subject matter of a trust property can be real or personal property covering movable (e.g. car) and immovable property (e.g house) and choses in action (e.g. money).
Some examples of when a trust instrument can be useful are as follows:-
i. Minors cannot be vested with legal title in property. Hence, a trustee can be appointed to hold the property on trust for a minors;
ii. a son/daughter may make an outright gift to his/her parent, in the hope that on the parent’s death the property will go to the son’s child. There is however no guarantee that the parent will do so. A gift to a trustee to hold upon trust for the parent for life with remainder to the child, will ensure that the child derives a benefit.
iii. to provide for causes of non-human objects. By means of trust one may donate money for the furtherance of education or to provide daily food for their pets.
The creation of a trust can also be made by parole (verbally) which is not advised for amongst other reasons lack of certainty.