I, like many of you, dream of one day having a trust fund baby of my very own. It’s been one of those legendary things that we have been hearing about since we were kids — like a unicorn or leprechaun — and every person secretly hopes to find one of their own. How do you get a trust fund baby of your very own?

It seems apparent to me that there are two pieces that need to be in place. The first piece is the baby, which most people already know will be delivered by the stork within a reasonable time after making an order, though you may be surprised to know that this is one of the few items still not available on Amazon. The second and most important piece of this dream is the trust fund. So, what is a trust fund, and how do you get one?

The trust legislation in Jamaica can make a definition of trusts somewhat difficult to distil. “Trust” is defined in the Trusts Act, 2019 as including (i) the trust property and (ii) the functions, interests and relationships under a trust, and “trust property” is defined in the Trusts Act, 2019 as property held on trust. Put simply, a trust is the relationship in which assets are held by someone for the benefit of others. This means that a trust can be a very useful legal tool for, amongst other things, estate planning purposes or to make provision for loved ones.

In order for a valid trust to exist, among other things it must be possible to (a) identify with certainty the trust property and statement that evidences the intention to create a trust; (b) identify the trustee(s); and (c) identify the beneficiaries or class of beneficiaries. It should be noted that in cases wherein the trust property is land, the declaration of trust must be in writing.

So, once we have identified our beneficiaries and have expressed our intention to create the trust — in writing if required (and advisable in any case) — the final element needed to realise our dream is a capable trustee.

Who is a trustee? Broadly speaking there are two types of trustees; individuals and corporate trustees each have their own advantages.

One or more persons can be appointed to act as trustee and manage the trust property. The trustee will owe a fiduciary duty to the beneficiaries and must act according to the terms of the declaration of trust or trust documents. Usually, the trustee will be required to manage the assets in the trust fund in a manner that maximises profit and safeguards the beneficiaries’ interests. Please note that pursuant to the Trust and Corporate Services Act, 2017 (the “TCSP Act”), any person who provides a trust service without a licence granted by the Financial Services Commission commits an offence.

An individual trustee may be able to get to know the settlor and beneficiaries on a personal level and therefore have a better understanding of their intentions. An individual may also be able to make decisions regarding the trust property very quickly. One disadvantage is that individuals are only able to act as trustee for a finite period — for example if an individual trustee dies or becomes incapacitated, a new trustee will need to be appointed according to the terms of the declaration of trust or trust document, or by agreement of the beneficiaries, or by the court, before the trust can continue to operate.

Alternatively, a corporate trustee could be appointed pursuant to the declaration of trust or trust deed. A corporate trustee has the advantage of prolonged existence, therefore once appointed, the corporate trustee can continue to act as trustee for the entirety of the duration of the trust, however long that may be. However, the corporate trustee will be constrained in its dealings by the policies of the corporate trustee when it comes to the exercise of any of the trustee’s discretionary powers and by the terms of its licence to provide trust services. A corporate trustee will be more reliant on documents like a letter of wishes given by the settlor, or the appointment of a protector (possibly covered in an upcoming article), to determine how its discretionary powers as trustee are to be exercised.

The type of trustee you choose will often depend on the details of the particular trust, such as how long you would like the trust to last, the number of beneficiaries, the discretionary powers that you would like the trustee to have, etc. If you have any doubt or questions about whether a trust would be useful to you or your estate then you should contact an attorney at law with particular expertise in trust law.

Once you have your beneficiaries, trust property and trustee identified, your attorney can assist with the preparation of the trust document (such as a trust deed or a will), and once all of those ingredients are mixed together just right you could have your very own trust fund baby.

Luke Phillips is an associate at Myers, Fletcher & Gordon, and is a member of the firm’s Commercial Department. Luke may be contacted via Luke.Phillips@mfg.com.jm or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.