Trusts provide people with more options when organising their financial affairs and when planning for the future. They can be used in a number of ways, such as to protect assets, for charitable purposes or to help in tax planning, and there are various types which can be created either during an individual's lifetime or set up on death.
A trust is a legal arrangement where an individual (the Settlor) transfers assets to specific people (the Trustees) to control, look after and, where appropriate, administer for the benefit of a specified person or group of people (the beneficiaries). Legally, the Trustees make all the decisions about the assets but must act in the best interests of the beneficiaries and in accordance with duties and powers set out in legislation and any Trust Deed. A Trust Deed is the document that sets up the Trust.
How can Thorntons help?
We have considerable experience in running charitable trusts and non-charitable trusts, and can give you balanced advice, and deal with both trust setting-up and ongoing administration for you. Trusts can be a sound and sensible approach for many situations, and we can discuss the different options available to you. For example, Trusts can be used to:
- Help in Inheritance Tax planning – a trust can hold investments, life policies, pension benefits, private company shares, and such like outside the estate of an individual, or their family, to help reduce or save for future tax
- Support charitable purposes, using a charitable trust with corresponding tax benefits
- Protect inheritance due to any children until they are old enough to fully take control of it
- Provide under an individual's Will that if their spouse or partner marries again they will be entitled to the income from the estate, but not to the capital, so the capital will ultimately pass on to the individual's own family
- Provide protection for an individual who may be in a potentially difficult financial situation, such as a difficult marriage or a high risk business, or who is vulnerable, often because of lack of mental capacity
- Avoid splitting ownership of a business if there are succession problems with the next generation(s)
- Hold an individual’s own assets which may be at risk in the future, for example from legal rights claims or on divorce
- Ring-fence Personal Injury compensation awards and protect them from being taken into account in assessing means tested benefits
- Take advantage of non-UK resident situations to reduce taxation