A nominee trust is a legal arrangement whereby a person, termed the settlor, appoints another person, termed the "nominee" or "trustee", to be the owner of the legal title to some property.
[1] Although the legal title is transferred to the nominee, the beneficial ownership of the property is transferred to a third person, termed the beneficiary.
[2] The arrangement is simple and passive: generally, the nominee is not required to do anything except carry out specific (lawful) actions if so directed by the beneficiaries.
[7] A nominee trust is also an example of an agency arrangement,[2] whereby the beneficiary acts as principal, and the nominee acts as agent.
This agency relationship means the nominee has limited, or no, discretion as to how the trust property is managed.