General Terms & Conditions

The terms and conditions for using a trust service will vary widely depending on the type of trust, the purpose of the trust, the jurisdiction, and the specific trust service provider (TSP) or legal agreement.

However, based on common practices and legal requirements, here are the key areas generally covered in the terms and conditions or the underlying trust agreement:

 

1. The Trust Document (Deed/Agreement)

 

The foundational legal document creating the trust will outline the core terms, which are paramount:

• The Parties: Clearly identifying the Settlor (creator of the trust), the Trustee(s) (manager of the assets), and the Beneficiaries (those who benefit).

• Trust Assets: A clear definition of the assets (money, property, investments, etc.) placed into the trust.

• Trust Purpose: The specific reason the trust was created (e.g., estate planning, asset protection, charitable giving).

• Trustee Powers and Duties: The full scope of authority and responsibilities of the trustee, including investment decisions, management, and administration. This is a crucial section.

• Distribution Rules: When, how, and to whom the trust income and/or capital should be distributed. This can be fixed or left to the trustee's discretion (discretionary trust).

• Trust Duration and Termination: When the trust ends and how the remaining assets are distributed.

• Governing Law and Jurisdiction: The country or state whose laws govern the trust and where disputes will be settled.

 

2. Terms of Service for the Trust Service Provider (TSP)

 

The terms of business will include:

• Scope of Services: A detailed description of the administrative, management, and fiduciary services the TSP will provide (e.g., record-keeping, tax filings, asset administration).

• Fees and Compensation: The TSP's fee structure includes initial setup costs, annual administrative fees, and fees for specific transactions or extraordinary services.

• Limitation of Liability: Clauses that limit the TSP's financial responsibility for losses, provided they acted reasonably and in good faith, and often exclude liability for market losses.

• Indemnity: Provisions where the client agrees to protect and reimburse the TSP for certain costs, expenses, and legal liabilities incurred while performing their duties according to the agreement.

• Confidentiality and Data Protection: Rules about how the TSP will handle sensitive information about the trust and its parties, adhering to privacy laws.

• Termination: Conditions under which the TSP can resign or be removed as trustee, and the procedures for a change of trustee.

• Conflict of Interest: Disclosures and rules governing potential conflicts of interest that the TSP might have.

 

3. Regulatory and Compliance Obligations

 

Many jurisdictions require trustees and trust parties to comply with regulations, which are incorporated into the terms of service:

• Anti-Money Laundering (AML) / Know Your Customer (KYC): Requirements for providing extensive personal and financial information (name, date of birth, nationality, residence, etc.) for all involved parties (settlors, trustees, and beneficiaries).

• Tax Compliance: Obligations related to filing tax returns for the trust, adhering to local and international tax reporting (like the UK's Trust Registration Service - TRS), and who is responsible for providing the necessary information.

• Record Keeping: Requirements for the trustee to maintain accurate and up-to-date records for a specified period.