Our Private Client team and its members are regularly recognised in numerous prestigious industry awards and programmes. We are often sought after for verifying legal questions in the field of private client and asset management.
If you’re thinking about setting up a Trust, either to benefit family members in the future or to manage assets for someone who is unable to do this for themselves, we would strongly recommend you come in and talk with us.
There are a number of Trust options we can explore together to find the one that best suits your needs. We can also discuss factors you should take into consideration when choosing Trustees and look at how your Trust should be set up if you think it may need to be altered in the future.
Contact us today for a tailored made solution for you and your family.
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A trust is a legal arrangement for managing assets. There are different types of trusts and they are taxed differently.
In a trust, assets are held and managed by one person or people (the trustee) to benefit another person or people (the beneficiary). The person providing the assets is called the settlor.
Put very simply, a trust fund is a way to help protect your assets and guarantee that your loved ones have financial stability for their future. Crucially, a trust can help to avoid hefty inheritance tax and make sure that the majority of your money, shares and equity are passed on in the most efficient way. It can also provide safe and secure protection for vulnerable individuals who may have a disability, learning difficulties or financial issues that they cannot control.
Trusts often mean that although you may be placing money/property somewhere you have no right to access the money or the property, you can still retain control over how the assets are used.
Trusts can be set up during your lifetime, where you can act as the trustees and control what happens to the assets you have gifted. They can also be set up in your will to deal with the protection of assets after your death.
These are most commonly used where you may be worried about the impact of care home fees, the divorce of a child or the protection of disabled or vulnerable members of your family.
There are several different types of trust that can be used depending on the amount and type of assets in the trust and how it will be used.
There are many perks to using a trust over a will, but some of the most common reasons to choose a trust are:
There are many different ways of setting up a Trust. As per below are examples of 7 ways of setting up a Trust.
Bare trusts provide for assets to be held in the name of trustees, albeit that the beneficiary has a right to the capital and income at any time assuming that they are over 18 years of age and live in England or Wales.
These trusts are commonly used to pass assets on to young people when they reach their majority.
These are also known as Life Interest Trusts or IIPs and are often useful in the following circumstances:
A will may provide for a spouse to be provided with a right to the income of an estate with the children to receive the estate following the death of the surviving spouse. This means that, for the remainder of the spouse’s life, they will be entitled to all income generated by the estate and this could include: dividends, bank or investment income, or a rent from property or the ability to reside in it.
They have an interest in possession in the income but not the capital itself – hence them often being described as a ‘life tenant’. Upon the death of the surviving spouse, the assets in the trust will be passed on to the capital beneficiaries and the trust will cease to exist.
This trust works slightly differently in that a trustee must pass on all trust income to the beneficiary as it arises, and it will be subject to tax according to the life tenant’s personal income tax rate.
Discretionary trusts are managed by trustees who are required to make decisions about both trust income and capital. The trustees will be charged with making decisions concerning provision and distribution from the trust including how often payments are made, the amounts of any payments and the identity of the beneficiary.
This type of trust is typically used for future needs or for beneficiaries who aren’t able to deal with the management of any provision themselves, for any reason.
This is where a number of different types of trusts are combined.
Settlor-interested trusts allow a spouse or civil partner to benefit from the trust through an interest in possession, accumulation or discretionary format.
This trust should be used for tax purposes if the trustees are not UK based.
The types of trusts included in your will are the same types as listed above, but only come into effect after you have died and will depend on your circumstances. These should be discussed when considering all aspects of future and estate planning
Setting up a trust is a very precise process that needs to be carefully worded and checked for any legal loopholes. To set up a trust, it’s vital to employ the services of a specialist solicitor.
If any of the above Trusts sound like something you are likely to benefit from then a trust could be the right choice for you. You don’t need to have any special commendations to be applicable for a trust, so if you’d feel as though a trust would benefit you more than a will then talk to your solicitor today.
At Fairmont Law Solicitors, we have years of experience in dealing with all legal aspects of wills, probate, Trusts and asset management. If you’re thinking about setting up a trust, then talk to our professional and friendly team today.
Money, shares, land or building can be held into a trust and is often known as ‘making a settlement’ or ‘Settling Property’
For Inheritance Tax purposes, each asset has its own separate identity. This means, for example, that one asset within a trust may be for the trustees to use at their discretion and therefore treated like a discretionary trust. Another item within the same trust may be set aside for a disabled person and treated like a trust for a disabled person. In this case, there will be different Inheritance Tax rules for each asset.
Even though different assets may receive different tax treatment, it is always the total value of all the assets in a trust that is used to work out whether a trust exceeds the Inheritance Tax threshold and whether Inheritance Tax is due. There are different rules for different types of trust.
A Trust is fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.
Drafting Trusts start at £250. You can see our full price guide here.
Price GuideAt Fairmont Law Solicitors our team can guide to the best effective way to manage your assets, eliminate costs and look after your loved ones and your wealth.
Contact us today.
You want someone who will take a hands-on approach to the role and seek professional advice where necessary. Close friends or family members will often be appropriate choices as trustees. It helps if they understand the family dynamic and the relationships involved.
You can choose almost anyone to be Trustee when setting up a Trust, including yourself, but we would not recommend that you act as Trustee on your own.
Trustees as a legal body will themselves have income tax, capital gains tax and inheritance tax liabilities and will have to file self-assessment tax returns.
How can a trust be varied? The simplest ways for a trustee to depart from the express terms of the trust are, by relying on an express clause allowing variation of provisions in the trust or, if all the beneficiaries consent and are of full age and capacity.
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To contact our team, please call us or email us at info@fairmontsolicitors.co.uk..
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