Trusts have been around for thousands of years and are a useful mechanism for managing wealth, safeguarding the needs of family members, and even saving tax.
A trust is an arrangement by which someone (the ‘settlor’) gives assets to individuals (the ‘trustees’) to hold for the benefit of others (the ‘beneficiaries’). Although the beneficiaries can get the benefit of the trust assets (which could be capital or income), it is the trustees who have control and make the decisions.
Trusts can be created orally but are usually written down, recording all the trustees’ powers and duties, as well as the ways in which the beneficiaries can benefit. This benefit could be a right to the income or capital, or a discretionary benefit – a mere potential to benefit (rather than an entitlement).
Whilst many trusts are created within Wills, it is often prudent to consider creating a trust during one’s lifetime. Some typical scenarios where trusts can be useful are:
• Passing assets down to later generations
• Paying school or university fees
• Protecting vulnerable beneficiaries who struggle to manage their money
• Safeguarding assets from creditors, bankruptcy or divorce claims
• Saving inheritance tax
At Legacy Law we recognise that every person’s circumstances are unique; we will work with you to create a bespoke arrangement suited to those circumstances. We are experts on all aspects of trusts and their taxation and we will work hard to ensure that you understand the terms of all documents you put in place.