Creation of Trusts
Trusts come in many different forms but are usually used to protect the interests of someone who is not getting an immediate outright benefit.
For example, a life interest trust inserted into a Will made on a second marriage can protect the interests of the surviving spouse and the interests of children from both former marriages. A disabled person’s trust can protect the interest of a child or adult who suffers from a physical or mental disability.
What is a trust?
In law, a trust is a legal arrangement between a settlor, the trustee and the beneficiary.
The settlor is the creator of the trust, the trustee is the holder and manager of the assets within it. The settlor and trustee can be the same individual, or you can have multiple trustees acting on behalf of the settlor, until they pass away.
Trusts are similar to a Will, as they have beneficiaries. These beneficiaries are the individuals for whom the trust was created for. This could be your immediate family, close friends, or even charitable organisations.
Why should I set up a trust?
You should set up a trust as this will keep your assets safe, ensuring that your loved ones have long term financial stability.
Is it better for me to have a Will or a trust?
It can be highly beneficial to have both a Will and a trust, especially if you have complex and substantial estates. However, everyone’s situation is different. If you have a smaller estate, a basic Will may be suitable. Contact Eric Robinson Solicitors for an expert Will Writing Service.
What is a declaration of trust?
Declarations of trust often relate to the purchase of freehold or leasehold property. If the property is bought in one person’s name, the declaration will protect another person who has contributed towards the purchase and may want to recoup that contribution on sale.
If the property is bought in more than one name, the declaration will set out the division of any net proceeds of sale between the parties – usually in unequal shares. A ‘Restriction’ will be entered on the relevant Land Registry title to let a purchaser know that the arrangement exists.
Declarations of trust are essential where an unmarried couple buys a property together but are contributing to the purchase price in unequal shares.
Do you pay inheritance tax on a trust?
Trusts may be used to help reduce inheritance tax liability. They can also restrict the age at which beneficiaries obtain an outright interest, although care needs to be taken in balancing those benefits against possible tax disadvantages. We can advise you on what form of trust, if any, is suitable for your needs.
What are the different types of trusts?
There are several types of trusts which you can create, depending on how you want to control your assets. However the UK Government has identified the below as the main types:
- This is a basic trust where the beneficiary has the right to the capital, assets, and income within it.
Interest in Possession Trust
- This trust is designed so the beneficiary has the right to receive the generated income of said trust or have the right to enjoy the trust’s assets in some other manner.
- A Discretionary Trust allows the trustees to decide how much the beneficiaries receive from the trust meaning that entitlements to beneficiaries are not fixed.
- With this trust, the trustees have authority to collect income within said trust and add it to the overall capital. They may also have the option to distribute this income, much like a Discretionary Trust.
- A mixed trust encompasses more than one type of trust. Each section of that trust is subject to their own individual tax rules and regulations.
- This trust is set up so the settlor, spouse or civil partner gains benefits from said trust.
- A Non-Resident Trust is used for when the trustees of said trust are not based within the UK.
How Eric Robinson Solicitors Can Help
At Eric Robinson Solicitors, we have an expert team of Wills and Trust lawyers, who understand the importance of setting up a trust, to keep your assets safe.
We will be able to simplify the process, helping you find the perfect trust for your situation, protecting your assets, as well as ensuring that your loved ones have long term financial stability.
We have 6 solicitor offices located in Hampshire & Surrey, contact Eric Robinson Solicitors today on 02380 218 000, or simply fill out our contact us form. We are more than happy to help.
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