Glossary Terms

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Settlor

Tolley

tax
Settlor

/ˈsɛtlə/

noun

Settlor
A settlor is a legal entity that makes a gift, directly or indirectly, to trustees. The result of such a gift is that control and legal title is passed to the trustees and a trust (or settlement) is established. The settlor will usually be the one who appoints the trustees and decides upon the beneficiaries, and the terms of the trust. 
 
Whilst a settlor is typically an individual, it is possible for companies, LLPs and even trustees of other trusts to be settlors. If the trust is established by an individual, this can happen during their lifetime (inter vivos) or on their death (testamentary).
 
Once the trust is established, the role of settlor falls away for most trust law purposes (although there can be ongoing tax consequences of being a settlor). In practice most lifetime settlors will be reluctant to relinquish all control of the trust assets and so will appoint themselves as trustee.
 
Whilst there is a clear settlor for legal purposes, there could be several different settlors for tax purposes. Take, for example, a beneficiary of a death estate who establishes a trust by way of a deed of variation. That individual will be the settlor for income tax purposes, but for inheritance tax purposes the settlor will be the deceased. 
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