A trust is a way to ring-fence funds and assets so that they can only be used for certain purposes or for the benefit of specified people. The purpose of the trust is specified in the ‘trust deed’, which may be incorporated in a Will.
It can be a good idea to set up a trust if:
- you want to manage your assets in a tax-efficient way, especially in relation to inheritance tax planning
- you want to provide for the future of children, grandchildren or disabled persons.
There are different types of trusts which are used for different purposes, for example:
- nil rate band discretionary trusts used for inheritance tax planning
- trusts for children or grandchildren to safeguard inheritances
- trusts for disabled persons can be set up within their lifetime to make sure funds and assets are properly and responsibly managed
When you set up a trust, you appoint trustees to manage the trust and make all decisions regarding the funds and assets. However, they do not necessarily have the ability to do whatever they want – the trust deed will specify the trustees’ powers and they must act within those powers. Trustees have legal duties to manage the trust properly, make payments only to the specified beneficiaries and prepare (annual) accounts and tax returns.
We can give you practical advice on whether a trust is suitable for you and your family, and how to set one up. Our advice includes:
- using trusts in inheritance tax planning
- setting up trusts, trustees’ powers, and the tax implications of setting one up
- on-going management of trusts - trustees’ meetings, decision-making advice
- making payments from trust funds or transferring assets into trust
- administration of trusts, for example, the preparation of annual accounts and tax returns
- how to wind up a trust and deal with the final distribution or transfer of assets, and the tax and accounting requirements.
When setting up a trust we will do our best to avoid unnecessary complexity and legal jargon. We believe that trusts should be used to help families, not to confuse them.
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