As we are aware, a trust is created when a settlor transfers assets to a trustee to hold for the benefit of one or more beneficiaries. The term ‘trust’ simply describes the fiduciary arrangement or relationship between those parties. It is not a legal entity, and does not have juristic personality. It is therefore incapable of holding assets, entering contracts or undertaking any other legal formalities in its own name. Indeed, as Adderly J commented in Tenesheles Trust & ors v BDO Mann Judd (Supreme Court of the Bahamas, 16 November 2009), ‘it is trite law that a trust lacks legal capacity…a trust is an arrangement, not an entity’.
In a trust arrangement, the appointed trustee is the person or entity with capacity to undertake these legal formalities. In assuming this function, the trustee acts as representative of the trust. The manner in which the trustee exercises this function is governed by the terms of the trust agreement and relevant local trust law.
Holding Of Assets