Trusts are a way of controlling assets for the benefit of others.
They are useful in lots of circumstances, but here are some reasons why people choose to set up a trust:
- Children – safeguarding assets and finances for future generations
- Protection – safeguarding assets from a business or relationship breakdown
- Support – so their needs are looked after when you are not around
- Vulnerability – for beneficiaries who cannot manage their own affairs.
If you create a trust and transfer assets into it, you are the settlor. The people who run the trust are the trustees and it is very common for settlors to also be trustees as well, which is a useful way of getting assets out of your estate but retaining control over them. Those who benefit under a trust are known as the beneficiaries.
There are different types of trust. The most common type is a discretionary trust, where – as it says on the tin – the trustees have a discretion over who and how to benefit the beneficiaries. There are also bare trusts, disabled person trusts, bereaved minors trusts and life interest trusts to name a few. To make sure you choose the right trust for you, it is important that you get professional advice before you put any plans into action.
How do I set up a trust?
A trust is created when you give assets to the trustees to hold for the beneficiaries. It can be set up during your lifetime (by using a trust deed) or upon death (by inclusion of your Will). Your trustees have responsibility for managing the assets for the benefit of the beneficiaries according to the terms of the Will or trust deed.
Who should I choose as my trustees?
Being a trustee can be daunting with all the legal issues and inheritance tax implications, so it’s important to appoint the correct people for the role. It is possible in certain circumstances to appoint a professional trustee, who has specialist knowledge and years of experience, to act as a trustee by themselves or alongside others.
Why should I set up a trust?
Trusts can be used in many circumstances, such as, legacy for children or grandchildren, planning wealth transfer within the family and people in business. And then there is the issue of tax! Trust taxation is complex and anyone contemplating estate planning using trusts needs solid trusts tax advice.
Our specialist trusts team can advise you on the type of trust to suit your needs and we also provide professional trustee services. Contact me for more information.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.
