Legal and beneficial ownership
The practical advantages of a trust derive from the distinction between the formal or legal owner of property, and the person who has the use or benefit of the property. For formal, legal purposes the Trustee is recognised as the owner, whereas the persons who have the use or benefit of the property are the Beneficiaries. It is possible for the Settlor to retain an interest in the trust and to be an actual or potential beneficiary but this can have estate duty and tax disadvantages. It is vital that the Trustee remains independent and exercises proper control over the trust property. The trust may be invalid if the Settlor continues to exercise control over the trust assets.