Trusts are a very useful way to pass assets to beneficiaries particularly to someone who is a spendthrift, immature or incapacitated. Trusts provide a safe way of holding and managing money or property for beneficiaries who are not ready or able to manage it for themselves.
Trusts can be established in a Will or during your lifetime and there are many different types of trust available.
What is a Trust?
A trust is created when someone transfers ownership of his or her assets into the name of someone else to be held for the benefit of one or more people. A trust can be created in your lifetime or by your Will.
Why are Trusts used?
Trusts are used for a variety of reasons including estate planning, reducing tax liability, protecting assets and assisting people with an incapacity.
Types of Trust
There are many different types of trust including the following:
- Bare Trusts – These are the simplest type of trust and are used for example, to hold assets for a child until they reach adulthood.
- 18-25 Trusts – These trusts can be set up in a Will by a parent wishing to delay the payment of funds to their children until the age of 25 years.
- Discretionary Trusts – In this type of trust there are a group of beneficiaries, none of whom have an automatic right to a particular share of the trust monies. Instead the trustees have discretion as to how much, if anything, each beneficiary should receive and when. These types of trusts are used for tax planning reasons and to prevent any means-tested benefits being affected by an inheritance.
- Life Interest Trusts – These trusts give the beneficiary the life to receive income from any assets, for example interest, rent or share dividends, whilst the capital is preserved for someone else. These types of trusts are sometimes used in connection with care fee planning.
- Personal Injury Trusts– These trusts ensure that any means-tested benefits are not affected by someone receiving an award of compensation due to a personal injury.
As well as being specialist solicitors who can advise on the details of setting up a Trust we can provide a service supporting trustees with the ongoing administration of any Trust.
We offer initial advice free of charge and without obligation from one of our specialist solicitors. You can call us on 01642 252 828 or use our online contact form and we will get back to you.