Talking about Trusts
Trusts are used to manage the passing on of assets or money in a particular way.
There are a number of different types of Trust, serving different functions.
They are a crucial aspect of estate planning.
Who’s involved in a Trust?
Settlor – that’s you, the person putting something in to the Trust (the asset);
Beneficiary – that’s the person (or people) who you intend to benefit from the Trust;
Trustee – the person (or people) who will manage the Trust
When is a Trust set up?
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.
What happens to the Trust asset?
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 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.
What does a Trust achieve?
It could be in existence for a variety of reasons.
If money is left to a child, it is held in a Trust until they reach 18, or another age specified by the Settlor. This is to ensure the money is managed wisely on their behalf and given to them when they are competent to have the responsibility.
It may be used to manage inheritance tax liability. A property is held in Trust for use by specific people is not owned by them and cannot be subject to tax when they die.
It may be used to protect an asset for a later Beneficiary. A sum of money or some property may be held in Trust with the ultimate purpose of being gifted to an individual, say a child. However, in the meantime, the Settlor may wish another person to benefit from the annual income (perhaps interest or rent) received on the asset.
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 distrubuting your assets now, and when you die. We will give you advice.