Trusts are useful tools for protecting and controlling assets and family wealth. In this article, we answer some questions about trusts that help to debunk any of the common misconceptions.
Will it be easy to access the funds and assets placed in the trust?
Trusts are designed to protect money and assets for the beneficiaries but are controlled by others – the trustees. The trustees have the legal power to deal with the trust’s assets and that includes choosing suitable investments and making payments out to beneficiaries. Access to the assets of the trust for the trustees is no different to if they were absolute owners but with one key difference: they must always have in mind the beneficiaries and how best to serve the trust from their perspective.
What can I invest in?
Anything! Trustees are held to the standard of a “prudent investor” and should take advice from a financial adviser when investing trust funds. And trustees have a fiduciary duty to the beneficiaries, which means a commitment to act in their best interests so care must be taken to choose appropriate investments.
Aren’t trusts just for the ‘super rich’?
No, a trust can provide protection for assets or family wealth, which do not have to be worth millions. Trusts can be used for many purposes: to hold inheritances on death, pension plan pay outs, personal injury rewards, asset sheltering and protection, to name a few.
Will I avoid paying tax if I create a trust?
Trusts have their own tax regime and can be liable to pay tax as individuals would. The key thing is planning. Trusts can be structured in such a way to minimise tax administration and costs and there are even opportunities with certain assets entering a trust to hold over capital gains. It is imperative that anyone considering setting up a trust takes professional advice on the tax rules associated with it.
Our specialist trusts team can help you if you are considering setting up a trust for your assets or family wealth and debunk any misconceptions surrounding trusts!
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.