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A declaration of trust involves an individual (the settlor) placing assets into a legal structure known as a trust, which is managed by trustees according to the terms set by the settlor. This process represents a gift with stipulations, as the settlor transfers assets to the trust while outlining conditions for their management. There are several reasons for making a declaration of trust, including securing asset protection to ensure proper management of assets in the future, planning for inheritance tax by moving assets outside of the estate, and protecting specific beneficiaries by designating how the assets should be distributed.
