What is a Trust?
Trusts have a bad image, people think of them as highly complex and that no-one understands them. Actually, all a trust means is that the asset is owned and controlled by a different person (or people) from the person who is entitled to benefit from it. A Trust can be very complicated or very simple, depending on why it is needed.
Why use a Trust?
There are many different reasons for using a Trust, far too many to list here! Some common reasons might be:
Control – if you want to give something away and you want yourself or your chosen people (your trustees) to control when it is received and maybe even who receives it, you might use a Trust.
Tax planning – if you want to make sure something is no longer in your estate for inheritance tax purposes for example (or won’t be after a certain amount of time has passed).
Keeping assets in the family – for example where a couple have children from a previous relationship they may want to each make sure that the other can enjoy assets for the rest of their life, but after their death ensure they are passed to their own children and not to the partner’s children.
Protecting a vulnerable beneficiary – for example if someone is mentally or chronically ill or vulnerable, it might be appropriate to hold assets on Trust for them. This might also be the case when the person is expecting they might be getting divorced or made bankrupt and does not want the assets to go to their former spouse or their creditors. Sometimes when people find out they have a particular condition which will deteriorate they actually declare a Trust over their assets so that the trustees can look after the assets for them when their condition means they are no longer able to do so.
Keeping entitlement to benefits – for example when giving money to someone who is claiming means tested benefits using a Trust appropriately will mean they should be able to continue claiming those benefits. This is also the case where someone has received compensation for an accident which is held in Trust for them.
Who is involved in the Trust?
Primarily there is what is called “the settlor”, meaning the person who gave the asset to the Trust, and the trustees who look after the assets in the way they are told to do by the Trust. There will also be a beneficiary or beneficiaries who are entitled to benefit from the Trust, there may be only one or two of these or there may be many – it all depends on the type of Trust.
Why would I want to do a Trust?
An ordinary person would very rarely think they wanted a Trust! When you explain your circumstances to a solicitor however you may find that a Trust is recommended to you as it is the best way of achieving what you want to do.
I am trustee of a Trust and have some queries regarding the administration of it – can you advise?
Yes, generally speaking if you have an administrative query about a Trust then we can help.
Can you change trustees of a Trust?
Yes, as long as you follow certain rules. How exactly the trustees are changed will depend on the wording of the Trust.
I am acting in the estate of someone who was a trustee before they died, should I include the Trust assets as part of the estate?
No, being a trustee does not mean that the asset is yours and it should not be included unless the trustee had rights as a beneficiary, in which case it may need to be included. Again, we could advise on this. Similarly, the Trust assets are not regarded as belonging to the trustee on divorce or for benefit purposes etc (again unless their entitlement as beneficiary changes this).
If you have questions regarding anything you have read above, or would like to make an appointment, please contact our Wills and Probate Department on 01405 765661.
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