A person who intentionally causes a private express trust to come into being, or who creates a settlement. A settlor of a trust is only involved in the establishment stage of the trust.
A trust does not exist until the settlor expresses an intention for the trust to exist and transfers the settled sum to the trustee. If a settlor is not independent to the trust (i.e. not a beneficiary), serious tax consequences may arise.
When creating a discretionary trust, the settlor must hand over the settled sum to the trustee to be held on the terms of the trust for the benefit of the beneficiaries. At this point, the trust is created because:
- the settlor has put the trustee in charge of trust property;
- the settlor has defined for the trustee which persons fall within the class of beneficiaries, as stated in the trust deed; and
- the trustee has agreed to act.
The settlor then steps out of the picture.