Property of any sort can be held on trust. The uses of trusts are many and varied. Trusts can be created during a person's life (usually by a trust instrument) or after death in a Will.

Creation

Trusts can be created by written document (express trusts) or they can be created by implication (implied trusts).

Typically a trust is created by one of the following:

1. a written trust document created by the settlor and signed by both the settlor and the trustees;
2. an oral declaration;^[4]
3. the will of the settlor; or
4. a court order (for example in family proceedings).

In some jurisdictions certain types of assets cannot be the subject of a trust without a written document.^[5]

Formalities

Generally, a trust requires three certainties, as determined in Knight v Knight:

1. Intention. There must be a clear intention to create a trust (Re Adams and the Kensington Vestry)
2. Subject Matter. The property subject to the trust must be clearly identified (Palmer v Simmonds). One cannot, for example, settle "the majority of my estate", as the precise extent cannot be ascertained. Trust property can be any form of property, be it real or personal, tangible or intangible. It is often, for example, real estate, shares or cash.
3. Objects. The beneficiaries of the trust must be clearly identified, or at least be ascertainable (Re Hain's Settlement). In the case of discretionary trusts, where the trustees have power to decide who the beneficiaries will be, the settlor must have described a clear class of beneficiaries (McPhail v Doulton). Beneficiaries can include people not born at the date of the trust (for example, "my future grandchildren"). Alternatively, the object of a trust could be a charitable purpose rather than specific beneficiaries.

Trustees

The trustee can be either a person or a legal entity such as a company. There can be multiple trustees, in which case the trust should provide a mechanism for the trustees to make decisions. A trust generally will not fail solely for want of a trustee; if there is no trustee, whoever has title to the trust property will be considered the trustee. A court may appoint a trustee if necessary.

The trustees will be the legal owners of the trust property. They can, for example, sign bank transactions, make investments or rent out a house (if part of the trust property). By default, being a trustee is an unpaid job. However, in modern times trustees are often lawyers or other professionals who cannot afford to work for free. Therefore, often a trust document will state specifically that trustees are entitled to reasonable payment for their work.

A trust can be created without the trustees having any knowledge of its existence. However, it is usual for the settlor to make arrangements with potential trustees (for example, friends or a professional) before creating the trust.

Beneficiaries

The beneficiaries are beneficial (or equitable) owners of the trust property. Either immediately or eventually, they will receive income from the trust property or they will receive the property itself. The extent of an individual beneficiary's interest depends on the wording of the trust document. One beneficiary may be entitled to income (for example, interest from a bank account), whereas another may be entitled to the entirety of the trust property when he turns 25. The settlor has much discretion when creating the trust, subject to limitations imposed by law.