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What is a Trust?
A trust is simply a way of protecting an asset by separating the legal owner from the beneficiary. A trust can be created with anything of value such as a property, pension lump sum, a savings account or specific belongings such as jewellery or premium bonds.
Trusts are used to manage and maintain assets for the benefit of beneficiaries and in some cases they may be helpful when considering inheritance tax planning. Setting up a trust can also help protect a family business, make charitable donations, control the distribution of assets over time or assist vulnerable beneficiaries in managing money.
It is possible to set up a trust during your lifetime (a lifetime trust) or create one within your will. Our team offer advice on the different types of trusts, the benefits and the pitfalls of creating a trust and can also advise about other options that could meet your objectives instead.
When a trust is set up, the trustees then have a number of responsibilities and rules to comply with. Therefore, after clients receive comprehensive advice, they often choose an alternate option which may be simpler and more cost-effective. We can advise about an existing trust, administering trusts, removing or appointing trustees and advising trustees on their powers and responsibilities. Please note, we do not currently set up lifetime Trusts for clients.
Asset protection
We understand that many of our clients wish to ensure their assets are preserved for future generations.
Our asset protection solicitors can advise you about the possible options to preserve your assets which will include inheritance tax planning and long-term care planning. We will also carefully guide you through the complex pitfalls of the local authority rules on ‘deliberate deprivation of assets’.
Our asset protection solicitors can give practical advice on:
- protecting assets in the event of remarriages or relationship breakdowns
- protecting assets in the event of a second relationship where you each have children from a previous relationship
- protection of pension and life policy lump-sum death benefits
- preserving funds for vulnerable beneficiaries
We can often provide you with a fixed fee cost, which will allow you to move forward with the reassurance of having certainty as to legal costs.
Frequently asked questions
Who can I protect assets for?
You are able to choose who your assets would be protected for. Normally, the person who sets up the trust will be able to benefit from it together with their children or remoter descendants
When is the best time to set up a trust?
A trust should be set up whilst you are fit and well so it is important not to delay as none of us know what is around the corner.
When is the best time to consider asset protection?
You should seek advice regarding asset protection whilst you are fit and well so it is important not to delay as none of us know what is around the corner.
What if I change my mind?
Setting up either a lifetime trust or a trust within your will is not permanent. If you have set up a lifetime trust and you change your mind, it is possible for the trustees to wind up the trust. If you have set up a trust in your will, you can change your will. Before winding up a lifetime trust, you would need to seek advice about the implications of this, particularly any tax implications.
What are the downsides of a trust?
Creating a trust places a lot of responsibility on the trustees and could be seen as a burden. They are required to register the trust with HMRC, submit yearly tax returns and ensure any tax is paid correctly. Clients can often be concerned about this as creating a trust is not as straightforward as some may think. It is very important to ensure the trustees are not falling foul of any requirements as they would be seen as being negligent in their role.
