Different Types of Trusts
How we can help you?
It is essential to seek legal advice when setting up a trust, as there are several different types, and the best option will be one which is most tax-efficient and fits the purpose.
There are myriad considerations when setting up a trust. Most forms of trust are set up very easily, but some may be subject to legislation or allowance changes, or perhaps dependant on the structure of a Will.
Read more below and contact us for advice and to discuss the detail of your requirements.
Interest in Possession Trust – The beneficiary can receive an income from the asset but not the asset itself.
For example, a trust set up for a rented property with a partner as the beneficiary of the trust for their lifetime. In this case, the partner is the beneficiary and can receive the income from the property. When they die the rented property will then pass to a specified recipient, such as their child.
A Bare Trust – This is a straightforward trust where everything is given to the beneficiary outright once they are over 18.
Mixed Trust This is where some of the trust has specific provisions tailored to the requirements of the settlor (the person making the trust).
For example, part of the trust may be in the same terms as an Interest in Possession Trust, but some of the assets are treated under the rules of a different trust.
Discretionary Trust. This type of trust gives the power to the trustees to decide how the assets are distributed, and to make investment decisions within the trust.
Vulnerable Person’s Trust. There are circumstances where a specific trust such as this may be of tax benefit, providing the beneficiary is a “vulnerable person”.
Frequently Asked Questions
It is important to consider tax-efficient ways for making gifts of money or property in the future in estate planning. One such method is to use a Trust.
This involves putting the asset (the money or property) into a Trust for a period of time. Whilst in the Trust, the asset is looked after by Trustees. They manage the Trust until such time as the asset is transferred out to the new owner, the beneficiary.
There is a wide range! You might have heard of an Interest in Possession Trust, a Bare Trust, a Mixed Trust or a Discretionary Trust? We also advise on and set up Vulnerable Person’s Trusts. These all provide for your assets to be kept and distributed in different ways.
The Trustees can be required to abide by certain restrictions or can be given the discretion to do certain things.
For example, some Trusts are time-limited and will simply pay out to the beneficiaries when the time period has expired. Others allow the Trustees to choose who to pay out to and when from a specific pool of people. Sometimes the Trustees will be instructed to pay the income from the asset to one beneficiary, keeping the asset itself for a different beneficiary.
With such a variety of Trusts available, it is very important to take advice as to the most appropriate type of Trust to fulfil your aims and objectives. We will help you establish the correct Trust(s) to suit your estate planning, and then draw up the Trust paperwork. This is a complex process, as it is essential that we consider the implications of all current legislation in completing the Trust to ensure it functions exactly as you would wish.
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We at Bicester Wills and Probate can offer expert advice and guidance in all of the above areas and more.