There are a number of reasons why a settlor would wish to establish a trust.

Some people use trusts for personal reasons relating to their own particular family situation; others use trusts to reduce income, capital or estate taxes.

Protection of family wealth and inheritance planning

Frequently, a trust is used to provide flexible control of assets for the benefit of children.

By establishing a trust, parents can select a trustee and specifically instruct the trustee how to use the assets for the benefit of the children.

The settlor can also create a trust during his/her lifetime and act as trustee himself/herself. If set up properly, this type of trust becomes an alternative to a will. Upon the death or disability of the settlor, a successor trustee would either continue managing the trust, or would simply distribute the trust assets according to the settlors directions.

Asset protection

Because title to assets legally vests in the trustee when the settlor settles the trust property, the settlor has no legal claim over such settled property. This provides a useful means of protecting assets from claims made against the settlor.

For example, the settlor could live in a politically unstable jurisdiction where expropriation of the settlor's assets is a distinct possibility.

Tax planning

Although this is a complex area, in simple terms the legal transfer of title of assets from the settlor to the trustee of the trust can be used very effectively in planning to mitigate the crystallisation of future tax liabilities against the assets, and income arising from the assets, that were once owned by the settlor.