How To Protect Assets or Resources Using Trusts
Assets or resources face various risks ranging from theft to depreciation and even mismanagement or misuse. Individuals, associations or entities who wish to protect assets or resources for a particular purpose have the option of using a Trust. A Trust is an arrangement whereby property is entrusted to a person or entity known as the Trustee to hold and manage in accordance with the terms of the Trust Agreement or Deed for the benefit of another person known as the beneficiary. Such property can be land, buildings, shares in a company, and even money.
A Trust can be privately set up by individuals for particular private goals or beneficiaries, or it can be a public trust whereby public resources are placed under a trust arrangement for the benefit of the public. A good example of a public trust in Uganda is the aBi Trust (Agricultural Business Initiative Trust) set up jointly by the Government of Uganda and the Government of Denmark to support agribusiness development in Uganda.
A trust is ideal where for one or more reasons, the true legal owners may not appropriately manage the property or resources on their own. This may be on account of young age, absence from Uganda in the case of citizens living abroad, inability due to sickness, or any other reason. Under a trust arrangement, the legal title in the Trust property or resources will vest in the Trustee (s) and the beneficiaries enjoy only the equitable title. This means that the Trustees have all the legal right to deal with the property without recourse to or consultation of the beneficiaries, provided that it is in the best interest of the beneficiaries. Trustees remain liable for actions arising from management of trust property although they may be indemnified out of the Trust property.
There is more than one way to create a trust. The most common way is through executing a Trust Deed which would express the intention as well as the terms of the arrangement. This intention can be expressed such as when stated in a trust deed, or it can be inferred from the dealings or conduct of the parties involved. The property or resources subject to the Trust has to be specific in the sense that it can be identified or specifically labelled as subject to the Trust. For example, the proceeds of a particular bank account, land or developments, etc.
As far as Trustees are concerned, there are no formal or legal restrictions as to their qualifications. The Trustees are the particular individuals who comprise the Board of Trustees of the Trust and are charged with the responsibility of managing the Trust and the Trust property. The Trustees Incorporation Act, Cap 165 permits anybody (whether individual or corporation or an association) to appoint a Trustee or Trustees. It is however appropriate that the Trustees are suitable to act in light of the particular objectives of the Trust. The Trustees may also consider registration of the Trust as a body corporate. If registered as a body corporate, the Trust would have the right to act in its own name for example to enter into contracts in the corporate name of the Trust rather than in the individual names of the Trustees.
In conclusion, a Trust is usually the choice when the objectives involved are charitable or social in nature, and where the circumstances do not permit for the beneficiaries to hold or manage the property or resources. However a Trust can also be used in private cases such as when safeguarding family property for the benefit of future generations.