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# Trust
- URL: https://university.heavnn.io/glossary/trust/
- Published: 2026-10-12T07:25:00.000Z
- Updated: 2026-10-12T07:24:59.000Z
- Description: A trust is a legal relationship under which a settlor places assets under trustee control for beneficiaries or a purpose, subject to national law.
- Author: Heavnn
- Tags: #glossary, #Import 2026-10-11 07:56

## What Is a Trust?

A trust is a legal relationship under which a settlor places assets under trustee control for beneficiaries or a purpose, subject to national law.

*Also known as: Express Trust, Settlement.*

## How Trust works

A trust is a legal arrangement in which a settlor transfers assets to a trustee, who holds legal title and manages the assets under the trust terms for beneficiaries or a specified purpose, while the assets form a separate fund outside the trustee's own estate. The Hague Trusts Convention of 1985 sets out these characteristics for recognition across legal systems. Tax treatment varies widely: some countries tax the trust, others the settlor or beneficiaries, and civil-law systems may not recognise trusts domestically. Trustees and beneficiaries often face beneficial ownership registers and automatic exchange reporting.

## Trust vs Foundation

Unlike a foundation, which is generally a legal entity with its own personality, a trust is a relationship in which the trustee holds legal title on behalf of others.

## Example

Illustrative example: A founder in Country A settles shares into a trust with a professional trustee in Country B for family beneficiaries. Country A may still attribute trust income to the founder if the founder retains benefit, while beneficiaries resident in Country C may be taxed on distributions.

## Common misconception

**Myth:** Moving assets into a trust removes them from all tax and reporting.

**Reality:** Trust income and assets generally remain subject to tax on the settlor, trustee or beneficiaries under national rules, and trust parties are commonly reportable under beneficial ownership and exchange regimes.

## Frequently asked questions

### Who owns assets held in a trust?

Assets held in a trust are legally titled to the trustee, but they form a separate fund managed for the beneficiaries, so legal ownership, control and economic benefit are split among different parties.

### How are trusts taxed internationally?

Trust taxation depends on national law: countries may tax the trustee, attribute income to the settlor, or tax beneficiaries on distributions, and civil-law jurisdictions may characterise a foreign trust differently.

## Related terms

- [Foreign Trust](https://university.heavnn.io/glossary/foreign-trust/) — Trust classified as foreign under domestic rules
- [Foreign Grantor Trust](https://university.heavnn.io/glossary/foreign-grantor-trust/) — US regime taxing trust income to settlor
- [Non-Resident Trust](https://university.heavnn.io/glossary/non-resident-trust/)

## Related guides

- [Tax management approaches: from compliance to aggressive strategies](https://university.heavnn.io/top-5-tax-management-approaches-from-compliance-to-aggressive-strategies/) — Risk spectrum of structures such as trusts
- [Why digital nomads are leaving the UK](https://university.heavnn.io/why-digital-nomads-are-leaving-the-uk-and-where-theyre-going/) — UK context where trust rules recently changed

## Sources

- [Hague Trusts Convention Article 2 definition](https://www.hcch.net/en/instruments/conventions/full-text/?cid=59&ref=university.heavnn.io)
- [Trust parties as beneficial owners under EU AML rules](https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32015L0849&ref=university.heavnn.io)

*Last verified: 2026-10-09\. This entry is general information, not tax or legal advice; rules vary by country and change over time.*