A trust is an arrangement whereby assets are protected by a trustee who manages them on behalf of others. Trusts are beneficial for a number of reasons, but many people choose offshore trusts in particular so that they can legally reduce their level of taxation and ensure that certain dependents or loved ones receive financial security in the future.

Essentially, a settler, or grantor, establishes the trust using his or her assets and enlists a trustee for the management of it. At a prearranged date, the beneficiaries will regain control of the assets bestowed upon them from the trust.

If you're interested in establishing a trust, but you want to get familiar with the various parties involved and the correct terminology, use this handy guide to learn more.

The Role of the Trust Settler

The settler of the trust is sometimes also called the grantor. Whatever the name, however, the title refers to the person who establishes the trust. If you are thinking about creating an offshore trust for any reason, you would be the settler.

The settler uses his or her own assets in the creation of the trust, and they identify the beneficiaries and pick the trustee. The establishment of an offshore trust is done in part through the creation of a trust deed.

The trust deed is a written agreement that details any provisions, lists the beneficiaries and outlines the objective of the trust as a whole.

The Role of the Trustee

A trustee is appointed by the settler to manage and oversee the assets placed within the trust. The trustee uses the trust deed as a guideline when making decisions, making investments or determining when to release assets to beneficiaries in the future.

In the event of deaths, bankruptcies and any major government or financial shifts, the trustee is responsible for taking control and determining what happens to the assets contained within the trust.

The Role of the Protector

The protector is the person who is appointed to help consult with the trustee in the management of the trust. The protector is typically named in the trust deed by the settler of the trust, and it may be someone the settler knows personally or someone with whom he or she has worked in the past.

Often, the trust deed includes a specific clause requiring that both the protector and the trustee are in agreement before any major changes to the trust take place. This provides balance to the power of the trustee.

The Role of the Beneficiaries

The beneficiaries are the recipients of the assets contained within the trust. In most cases, the beneficiaries are the settler's spouse, dependents or other loved ones whom the settler chose to financially care for after death.

However, beneficiaries are often surprising and could include employees or even charitable organizations and political agencies. Beneficiaries have no role in the management of the trust and only come into play at certain points when assets contained within the trust are to be dispersed.

There are several parties involved in an offshore trust, and each participates to help protect and preserve assets offshore.