A trust is a legal arrangement where a person gives assets to another person or entity to manage for the benefit of a third person. It can be a valuable estate planning tool and a highly effective way of managing and protecting wealth.
However, trusts are complex instruments, and it is crucial that they are set up correctly so that they function as they should.
At Beverley Morris & Co. Solicitors, our experienced and approachable Trusts lawyers in Blackheath have been providing expert Trusts and Estate Management services to our clients in London and across the South East for many years.
We can help guide you through this highly complex and ever-changing area of law, providing you with clear, up-to-date, expert advice on how effectively to plan ahead for your future and those of your loved ones.
If you would like advice regarding trusts and estates, please get in touch with Beverley Morris & Co. Solicitors on 020 8852 4433 or email enquiries@beverleymorris.co.uk.
In this blog, our experienced Trusts and Asset Protection Solicitors consider some of the most common forms of Trusts.
What is a Trust?
A trust is a way of managing assets (such as money, investments, land, or buildings) for the benefit of other people. There are various different types of trusts that are used for different purposes and taxed differently.
All trusts involve:
- Settlor. This is the person who puts assets in a trust and sets out how the assets should be used, usually in a document called a ‘trust deed’.
- Trustee. A trustee is a person who manages the assets held in a trust, including ensuring the settlor’s wishes are followed, paying any tax due, and deciding how to invest or use the trust’s assets. There can be more than one trustee per trust.
- Beneficiary. A beneficiary may be an individual, a group of individuals, a whole family or other defined groups of people. Beneficiaries are the people who benefit from the trust, whether that be just from the income of a trust (for example from renting out a house held in a trust), the capital only, such as receiving shares held in a trust when they reach a certain age, or both the income and capital of the trust.
When would you need a Trust?
Trusts are set up for various reasons, including:
- To control and protect family assets.
- When someone is too young to handle their own affairs.
- When someone is unable to handle their own affairs because they are incapacitated.
- To pass on assets whilst they are alive.
- To pass on assets when they die.
- Under the rules of inheritance, if someone dies without a will (in England and Wales).
What are some common types of Trust?
Many different types of Trust are available, and which one is right for each individual depends on their own circumstances and motivations.
Some of the most popular forms of Trust include:
Family Trusts.
- What are Family Trusts? A family trust is a type of trust that is set up for the benefit of family members. Family trusts are a way to pass on wealth, protect a family’s assets, and manage family finance. Family trusts can be set up in different ways. The main types of trusts used for family trusts are bare trusts, interest in possession trusts and discretionary trusts.
- When would you use a Family Trust? Family trusts are used to pass on assets to children or grandchildren when they reach a certain age, protect assets when entering into a marriage, and pass assets on to future generations tax-efficiently.
Discretionary Trusts.
- What are Discretionary Trusts? A discretionary trust is the most flexible form of trust. All capital and income held in the trust is distributed entirely at the trustees’ discretion. Discretionary trusts allow the trustees to decide how much each beneficiary should receive from the trust and when they should receive it.
- When would you use a Discretionary Trust? Discretionary trusts can be used to set aside assets for a future need or to protect assets for beneficiaries who cannot manage their own funds, such as children or those lacking capacity.
Bare Trusts.
- What are Bare Trusts? Bare trusts are a form of ‘absolute’ or ‘fixed’ trust. In this form of trust, the settlor allows assets to be held by a trustee on behalf of a specified beneficiary until they turn 18 (in England and Wales) or reach a specified age. At that point, the beneficiary is entitled to all the capital in the trust and any income that has been received.
- When would you use a Bare Trust? This type of trust is commonly used to make gifts to young people.
Personal Injury Trusts.
- What are Personal Injury Trusts? If you have been involved in an accident and receive compensation, you can choose to hold your payment in a separate bank account, known as a personal injury trust account.
- When would you use a Personal Injury Trust? Managing your money in this way means the compensation payment cannot be included in an assessment for means-tested benefits, enabling you to continue to access any state-provided care that you need.
Trusts Solicitors Blackheath
Trusts can be an effective form of estate planning, but specialist legal advice is crucial.
At Beverley Morris & Co, our specialist private client solicitors in Blackheath will invest time getting to know you and suggest the legal solution best tailored to meet your needs.
Our experienced trust solicitors will be able to ensure that your trust is set up correctly.
They can advise beneficiaries, trustees, and settlors on all aspects of trust law.
For more information, or to speak to one of the team, call 020 8852 4433 or email enquiries@beverleymorris.co.uk.
Alternatively, click here to arrange a call back.