Should I set up a Trust?
A Trust is a tool which is used to manage the administration or gifting of assets or money in a specific way.
Trusts are a tax efficient way of managing gifts, so there is a wide range of Trusts to provide for a variety of estate planning needs.
Explain more about how a Trust is set up?
The person who puts the initial asset in to start the Trust is called the Settlor. A Settlor can set up a Trust at any time. It may be established during a lifetime, or it may be started under the provisions of a Will.
When the Settlor puts money or property into Trust, it is no longer theirs. It belongs to the Trust and is managed by the Trustees – the people responsible for administering the Trust.
The Settlor will specify what should happen to the asset, so that the Trustees know how to manage it. Some Trusts last in perpetuity (forever). Others have a specified end date, for example when the Beneficiary turns 18. The Beneficiary is the person (or people) who benefit from the Trust.
Why would someone set up a Trust?
Trusts are used in all sorts of situations.
For example, if money is left to someone who is a child at the time, the money is held in a Trust until they either reach 18, or the age specified by the Settlor. This is done to ensure the money is managed on their behalf and released to them when it is hoped they will be competent to use it wisely.
A Trust can be set up to limit inheritance tax liability. If a property is held in Trust for use by specific people, it is not owned by them and therefore cannot be subject to tax when they die.
Property, money or other assets may be held in Trust with the ultimate purpose of being gifted to an individual, say a child.
The Settlor may wish another person to benefit from the annual income (perhaps rent or interest) received on the asset in the meantime. This can be achieved through a Trust.
How do I know if a Trust should be used in my circumstances?
Talk to us about what you’d like to achieve in terms of managing and distributing your assets now, and when you die. We will give you advice about types of Trust which could be used in these instances, and we’ll take it from there.