In simple terms, a trust is a relationship in which a person transfers something of value, called an "asset", to another person, called a "trustee."

The trustee then manages and controls this asset for the benefit of a third person, called a "beneficiary".

A trust consists of four main components, legally bound together and defined by the trust deed, as follows:

The settlor is the person who establishes, or settles, the trust.

The beneficiary, or beneficiaries, who receive the benefits (income and/or capital) of the trust. The settlor can also be a beneficiary.

The assets, which are the properties transferred to the trust.

The trustee, or trustees, who is(are) the person(s) or entity that manages the trust’s assets and distributes the property and/or income according to terms established by the settlor.

A fifth component, a letter of wishes is sometimes also used to set out, in plain English, the wishes of the settlor with regard to the way in which the trust ought to be administered and distributed.

However, unlike the trust deed, the letter of wishes is not a legally binding document but does provide useful guidance to the trustees as to the settlor's intentions in settling the trust.