TRUSTS
WHAT IS A TRUST?
A trust is an obligation binding a person called a trustee to deal with property in a particular way, for the benefit of others known as beneficiaries.
The trustees are legally bound to manage the property on behalf of the beneficiaries according to the terms of the trust.
If you have already decided this is a complex subject, speak to a Solicitor who is expert in Will, trusts and Probate.
WHAT ARE THE MAIN TYPES OF TRUST?
Listed below are some of the most common types of trust. If you wish to create a trust detailed consideration should be given to your financial and family circumstances and the current tax laws to select the appropriate type of trust for you. Our Solicitors can advise you on the most suitable arrangement for you and your family.
CHILDREN UNDER 18?
Consider a Bare Trust
This type of trust is commonly used to pass assets to children or grandchildren to be held in the name of the trustee until the child reaches the age of 18. For tax purposes the assets are treated as the property of the beneficiary. A bare trust therefore offers a highly tax efficient method of protecting assets as there are no tax implications for the settlor. It is important to act in good time, speak to our experienced Solicitor now.
NEED TO PROTECT ASSETS FROM BANKRUPCY OR OTHER 3RD PARTY?
Consider a Discretionary Trust
With this type of trust no beneficiary has any absolute right to receive anything from the trust. The trustees must use their discretion to decide which (if any) of the intended beneficiaries they want to benefit at a particular time and to what extent they should benefit.
A discretionary trust can be very useful where you wish to give away assets but do not yet wish to give the intended beneficiaries control of the assets. They can be useful in protecting assets from third parties as the fact that other beneficiaries could in theory benefit from the trust means that third parties cannot treat the assets as belonging to the individual beneficiary for example in a bankruptcy.
SECOND MARRIAGE?
Consider an Interest in Possession Trust
This type of trust gives the beneficiary the right to income from the trust assets or the right to occupy the property during their lifetime. Such a beneficiary is known as the life tenant. Upon the death of the life tenant the capital will pass to the intended beneficiaries. Such a trust is commonly used in second marriages to ensure that the husband/wife from the second marriage can continue to live in the property until their death. The children from a previous relationship will then receive the capital.
The trustees can be given further powers to provide for changes in circumstances such as passing the capital assets to the life tenant. For sound advice and to ensure your trust has force under the law make an appointment to discuss your requirements with one of our experienced Solicitors.
TRUSTEES
Careful consideration should be given to the choice of trustees as they will administer the trust assets for the benefit of the beneficiaries. You should choose people you are confident will carry out your wishes in the best interests of the beneficiaries. If the trust is set up during your lifetime you as the person setting up the trust can be a trustee. You may wish to appoint a trusted family member or professional adviser as additional trustees.
CALL 0161 832 3304 FOR A CONSULTATION WITH A SOLICITOR AT DAVIS BLANK FURNISS
