What is a passive trust
There are a number of different trust structures to choose from, depending on the country you wish to create your trust in and the personal or financial requirements you want the trust to meet. A passive trust is one type of trust formation and it is the popular choice of many from across the globe. It involves the transfer of property from the original owner to the trust structure, and does not involve the trustee performing any active duties.
For more information on the types of trusts available, please view our asset protection services page.
Passive trust explained
A passive trust is made up of a settlor, a trustee and beneficiaries. The settlor is the individual who has established the trust. The trustee is traditionally required to administer the trust in compliance with the settlor’s wishes, whilst the beneficiaries are those who benefit from the formation of the trust.
A passive trust is a trust where the trustee has no active role, other than to transfer the trust assets to the selected beneficiaries. The nominated trustee is not required to perform any active duties with regards to the management of the trust.
A passive trust is also known as a dry trust, simple trust or nominal trust. The basis of a passive trust is to hold the assets for the benefit of the beneficiaries, as stipulated by the settlor.
In many trust structures, the trustee will take on the legal titles of the assets held in the trust until the assets are distributed to the beneficiaries, however in a passive trust this is not necessary. In other words, a passive trust is simply a trust structure that holds the assets of a settlor until the transfer of the assets is initiated to the beneficiaries. The transfer of title of the assets held in a passive trust will be transferred directly from the settlor to the beneficiaries.
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