A trust is a formal way of giving a group of people (known as Trustees) authority to hold and manage assets – usually money, property or shares – on behalf of one or more beneficiaries.
They are a frequently used way of protecting assets for young people until they are capable of taking control of the assets for themselves. Trusts can also be a way of reducing the inheritance tax payable on your estate, if planned and prepared properly.
A trust can be made during your lifetime, but also many people establish a trust through their will.
The terms of the trust – dictating the limits of the power and authority of the Trustees and when the beneficiaries can have access to the assets – are confirmed in writing.
There are many types of trusts for different purposes which each have their own tax rules. Some of the most-commonly created are:
- Trusts for minors – under 18s.
- Pilot trusts – for inheritance tax planning purposes, intended to receive pension funds or the proceeds of a life policy to present them from being taxed, unlike estate of a surviving spouse.
- Life interest trusts – providing funds for the lifetime of one person.
- Discretionary trusts – where there are a number of people who can benefit at the trustees’ discretion.
- Trusts for disabled persons – specially designed to give favourable tax considerations.
- Charitable trusts – providing income for charitable concerns.
- Bare trusts – held for children or adults unable to look after the money themselves.
- Personal injury trusts – set up as discretionary or bare trusts to benefit someone who has received a cash settlement following injury to allow them to continue receiving benefits.
- Declarations of trust – used to define how proceeds from the sale of property would be split if one party has put more into the purchase than the other.
How we can help
At Else Solicitors we have considerable experience of managing trusts and can guide you through all the options and explain the practical and tax benefits of each one.
We can handle all the formalities – such as checking documents, moving assets into the trust, and registering the trust if necessary. We can also deal with tax returns and ensure full compliance with all legal requirements.