A trust is a legal arrangement for managing assets (money, investments, shares, land, or property). Trusts can be used in all sorts of situations and for various reasons, often to save tax. There are a variety of different trusts available, and they are all taxed differently. Some trusts are effective during your lifetime; others are triggered when you die. Trusts can be set up at any time or written into your will.
Who are the key parties involved in a trust?
- The ‘settlor’ – the person who puts assets into a trust.
- The ‘trustees’ – the people who manages the trust (you should have at least 2).
- The ‘beneficiary’ – the person or people who benefits from the trust.
When are trusts used?
- To protect and control family assets.
- When somebody is too young to handle their affairs or if you wish to set a specific age for somebody to receive any future inheritance.
- If the beneficiary is incapable of looking after their own financial affairs.
- To pass on money / property while you are still alive.
- To pass on money / assets under the terms of your will when you die (“Will Trusts”).
- Under the Rules of Intestacy – which apply when someone dies without a valid Will.
What are trustees responsible for?
The trustees are the legal owners of the assets that are held in a trust. They are responsible for:
- Dealing with the assets in accordance with the terms set out in the Trust Deed.
- Managing the trust.
- Making decisions on how the assets should be used or investing the assets.
- Paying any tax on the income.
If the trustees change, the trust can continue, however there must always be a ‘Lead Trustee’, therefore it is recommended to appoint a minimum of two trustees. Your trustees can be friends, family, or legal professionals, but importantly, they should be somebody you can rely on.
Tax Consequences
The type of trust in place and the nature and the value of the trust’s assets will impact on the tax liability. We recommend specialist legal advice about the type of trust that best suits your circumstances and the tax implications associated with it.
Ending a Trust
Trusts can end by an event, for example:
- The beneficiary has reached the attained age set out in the Trust Deed.
- The death of the beneficiary.
- A result of a decision by the trustees.
If you are a trustee, your solicitor can help you decide if you have:
- Have carried out the purpose of the trust by ending it.
- Kept suitable records of your actions.
- Given the assets in the trust to the beneficiaries.
- Reported on and paid any tax owed.
Trusts Lawyer Near Me
Trusts can be incredibly useful in all sorts of cases and for all sorts of reasons, but they can be complicated, and specialist legal advice is necessary.
At Bridge McFarland, our experienced trusts solicitors work with you to plan the best strategies to suit you and your family’s immediate and future requirements. We understand that estate planning can be complex, so we aim to explain this in a simplified manner whilst looking to provide innovative solutions to achieve your goals.
To speak to a solicitor in any of our offices – Grimsby, Market Rasen, Hull, Scarborough, Louth or Lincoln – please call 0800 987 8800 or email wills@bmcf.co.uk.
