A Trust is the formal transfer of assets (it could be property, shares or just cash) to a small group of people or to a trust company with instructions that they hold the assets for the benefit of others.
Put simply, a trust is an obligation on one or more people (the trustees) to handle assets in a way that will benefit one or more people (the beneficiaries), rather than the beneficiaries directly receiving the assets. The person putting the assets into the trust is called the settlor.
The trustees will ensure that the assets within the trust are managed in the right way, including by making decisions about transferring capital and income to beneficiaries.
Trusts can be a useful tool in reducing tax liabilities, particularly inheritance tax (IHT), whether they are created during your lifetime or by your Will. Although they are often thought of as only for the very wealthy, they can also be useful for people with more modest assets, in situations including
- as part of estate planning when a couple are not married or in a civil partnership
- when a beneficiary is too young or too infirm to manage assets themselves
- to ensure children from a previous marriage benefit as well as your current partner
- transferring a family business to the right person.
Trusts are very flexible. For example, when set up during the settlor’s lifetime, the terms of the trust when it is established can allow the settlor to guide the trustees as to how it is run and the way income and capital is distributed.
We can provide expert advice on trusts, the type of trust appropriate to your circumstances, as well as providing the legal expertise needed to create a trust. We can also act as trustees.
For more information on our trust legal services, please contact us.