Trusts

What are trusts for?

A trust agreement is a legal document that spells out the rules that you want followed for property held in trust for your beneficiaries. 

Typically they are often created  to minimise estate taxes and can void probate. e.g. If it is an irrevocable trust, it may not be considered part of the taxable estate, so fewer taxes may be due upon your death. Also assets in a trust may additionally be able to pass outside of probate, saving time, court fees, and potentially reducing estate taxes.  

The type of trust you use will depend on who the beneficiaries are, what the assets are, and how and when you want the assets to be distributed. Thus there are different types of trust designed to meet different kinds of needs

The main types are:

  • Fixed Trusts; beneficiaries are named and the proportions for how much to pay to each one are clearly stated.

  • Discretionary Trusts; beneficiaries are named but the Trustees have the power to decide how much to give to each, according to circumstances.

  • Interest in Possession Trusts; beneficiary, such as a spouse, can use the asset when they are alive but must pass it to another named beneficiary, such as a child, when they die. This type of trust is sometimes used to ensure that one's spouse is provided for, while keeping the estate intact to pass to one's children. Interest in Possession Trusts have less beneficial tax rates than discretionary trusts.

  • Accumulation and Maintenance Trusts; usually used to provide an ongoing income for children, to cover living costs, school fees and so on. These trusts attract enhanced tax rates, but they also have some complex rules and restrictions, and it is wise to seek the advice of a solicitor and/or accountant when establishing or managing such a trust.

  • Protective Trusts;  beneficiary can receive income from the Trust while the capital remains protected. This type of trust is usually used for beneficiaries who are bankrupt or likely to become so.

  • Trusts for Disabled/vulnerable Beneficiaries; discretionary trusts with special tax exemptions for beneficiaries who are disabled or seen to be vulnerable (usually someone under 18 whose parent has died).

To get more information about Trusts You can  :

 

  • Visit GOV.UK  

  • Ask a solicitor for advise and if you choose them to act get them to draw up the relevant documents.

  • click here to schedule a FREE consultation. We are happy to advise and can act on your behalf for a significantly lower cost than a solicitor would charge to achieve exactly the same outcome. 

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