A Trust is an arrangement where an individual or a group of people are made responsible for assets which are to benefit another. These administrators are known as Trustees. The assets are held in trust until the desired time. This might be an event such as someone turning 18. Setting up a Trust can help minimise Inheritance Tax, protect family assets against care fees, to ringfence funds for future education.
There are different types of Trust with different advantages: Will Trusts and Lifetime Trusts can be either fixed (for example, where the beneficiary has an absolute right to occupy a house or receive income from investments) or discretionary (where the trustees have a discretion as to how to benefit any of potential beneficiaries). The tax treatment of such Trusts differs.
Lifetime Trusts are established straight away and are often known as Property or Asset Protection Trusts. By placing property outside your estate irrevocably (permanently take the assets out of your assets) such Trusts can have a number of advantages. However, once the asset has been placed in an irrevocable trust, it cannot be reversed so you must be sure of your decision to do so and know that you will not need the asset yourself one day.
As can be seen, there are significant implications to setting up a Trust, particularly a Lifetime Trust, so legal advice is essential. Do feel free to contact Jonathan Margarson to discuss or request more detailed information via Contact Us.