An Introduction to Trusts:
Trusts come in several forms, each with different purposes, rules and tax implications. Most trusts are established to preserve assets and ensure that the beneficiaries of your estate benefit as intended.
In its most basic form a trust is a three-part relationship. A Settlor (the first party) will transfer assets to a Trustee (the second party) for the benefit of a Beneficiary (the third party). Each type of trust can affect the nature, purpose and dynamic of this three-part relationship.
A trust may be set up for a number of reasons :
Why establish a Trust?
Declarations of Trusts can appear complex and daunting to those seeking to establish or manage a trust, especially if multiple parties and/or high value assets are involved.
However, trusts can be incredibly useful, and they may be established either during your life time or through your Will for several reasons:
To provide flexibility as to when beneficiaries receive capital and/or income;
To retain an element of control over assets;
To protect or ring-fence assets;
To hold funds for vulnerable persons or children;
To hold business property for the purposes of succession;
To ensure that life policy proceeds will not be subject to inheritance tax; and
For other tax planning purposes as trusts are subject to their own tax planning rules and impacted by many types of tax.
Please note however that there are a number of things you need to consider when setting up a trust not least:
- Who will be the trustees?
- What are the implications to you from a tax point of view of setting up a trust?
- What are the tax implications for the trust itself once it is established?
- Certain trusts now need to be registered with HMRC upon creation – does your trust?
During the lifetime of the trust it might be necessary for trustees to retire, be removed and replacements appointed. We can advise on the correct process for doing this and, indeed, advise trustees of their duties and obligations under the terms of the trust and general law
How rhw can help:
There are many things to consider when establishing or managing a trust, such as selecting appropriate trustees, the tax implications for you, the tax implications for the trust and its contents, registering a trust with HMRC, and any additional duties and obligations depending on the type of trust established and your role in the original three-part relationship.
rhw Solicitors can help with this. We have over 180 years of invaluable experience in the establishment, administration and winding-up of bespoke Declarations of Trusts. We will ensure that the correct trusts are established and effectively managed to address your personal circumstances and concerns, creating trusts that are as flexible or as rigid as you require.
Contact Jessica Pope for more details of how rhw can help you. Our fixed fees for Declarations of Trusts reflect this and the quality of work provided.