A trust appears to be a complicated concept, not easily understood as a close corporation or a company. A trust does not have a separate legal identity. The law usually looks through the entity to what is behind it.
● The rate of income tax imposed on a trust is similar to the rate of income tax imposed on a natural person and not a flat rate as imposed in the case of a closed corporation or a company.
● A person does not own a trust.
● A trust can neither have shareholders nor members.
● A trust comes into existence when the founder of the trust hands over the ownership of an asset to a trustee who administers and manages the asset for the benefit of a beneficiary third person.
● Usually, trusts are created for charitable purposes.
● A trustee acts in his official capacity rather than his private capacity.
● The ownership of a trust does not belong to any individual.
● The ownership is divided between the trustees of the trust who work for the profit of a beneficiary.
● The beneficiary does not have any control over the assets of the trust.
