Self settled trust is a type of trust in which the settlor is also the person who is to receive the benefits from the trust. These are spendthrift trusts that the settlor forms for his or her own benefit. In such trusts, the settlor and beneficiary are one and the same person. This is done for protecting the trust assets from creditors. Currently 13 states offer self settled trust legislation.
In the beginning
Trusts were first derived under the Statute of Uses in England in1535. Prior to 1535, the legal real property practice was for landlords (landholders) to pay a type of land-royalty fee to the King. As you mayknow, land in England was fundamentally owned by the King and landlordscould buy leaseholds from the King in his capacity of freeholder.These leaseholds could span a period of years exceeding 99 years.Oddly, the real property laws of England and many of its then colonies still use this land ownership of freehold and leasehold. Under KingHenry VIII’s reign these payments were exacted from landholders andupon the death of a landholder the King could exact additional fees,like an inheritance tax, from the heir. Landholders began leaseholds into the name of one individual but for the benefit of another. This transactional party above would be termed the cestuique use and become the person benefiting from the use of the land, butwas neither the initial landholder nor the heir of the landholder.Under this plan, there arose a type of land ownership termed “use”. This idea caught on quickly across the English country side and it wasnot long before the courts of England recognized this use right allowing the landholder to transfer possession of the land to oneindividual for use of the land while transferring legal title to another. Transferring title to land to two or more individuals, thelandholder was also able to avoid other fees such as marriage fees andother fees associated with the death of a landholder. If the propertywas held in other persons’ names, a landholder could also avoid losing the property due to debt or felony conviction. By the end of thefifteenth century, almost all of the land in England was owned in use.