Trusts

During your lifetime you can put assets which you no longer need into a trust to reduce your wealth and minimise Inheritance Tax on your death. The people (individuals, banks, etc.) assigned to administer the trust are known as the ‘trustees’ and those benefitting are the ‘beneficiaries.’ The person who set up the trust is known as the ‘settlor.’
There are many types of trust and we can advise you on the most appropriate form of trust to suit your purposes.
➢ Bare trusts – where the beneficiary gains immediate, absolute right to the assets in the Trust and the income generated. Once this Trust has been set up, the beneficiaries can’t be changed
➢ Discretionary trust – the trustees have absolute power to decide how the assets in the trust are distributed. This may be appropriate if you have identified a group of people you wish to benefit but are unsure what their circumstances will be in the future, i.e. who will require a greater share of the trust than the others. You could set up this kind of trust for your grandchildren and leave it to the trustees (who could be the grandchildren’s parents) to decide how to divide the income and capital between the grandchildren. The trustees will have the power to make investment decisions on behalf of the trust
➢ Interest in possession trust – this is a fixed interest or life interest trust which can also be used in a Will. For example, one person can enjoy the assets placed in a trust for life, i.e. receive the income, whilst the capital in due course passes to others. If the beneficiary is entitled to the income for the duration of his or her life, he or she is known as a “Life tenant.”
➢ Trust for a vulnerable person – if the only one who benefits from the trust is a vulnerable person (for example, someone with a disability or an orphaned child) then there’s usually less tax to pay on income and profits from the trust.
➢ Charitable trust – This is set up for a cause that will benefit either a class of people or a society at large rather than specific beneficiaries. Charitable trusts get tax relief benefits that private trusts do not.

For advice and further information please contact our Wills and Probate solicitors on 020 8826 1203 / 020 8826 2273 or email us at info@caseandlaw.co.uk. Alternatively, you can fill out the contact form below to arrange for a call back from one of our specialist solicitors.