Trusts offer a reliable way to protect what matters most and ensure your wishes are carried out with confidence
Our deep knowledge of Trust creation guarantees your assets are well-protected and carefully overseen.
What is a Trust?
A trust is a legal arrangement for managing assets. A Trust can provide a form of protection over the asset. Trusts can be created for various reasons:
- To provide for beneficiaries who cannot deal with property themselves or for minor children.
- To achieve flexibility to provide among a class of beneficiaries: grandchildren, great-grandchildren or someone who is not yet born.
- To protect the capital. For instance, for someone who is mentally incapable or vulnerable in a certain way, or other predatory challenges to the estate may occur.
- Tax planning purposes.
Is it better for me to have a Will or a trust?
A Will and a Trust are significant components of Estate Planning. The crucial difference between these is that a professionally drafted Will will do a perfect job of distributing your estate when the time comes but will not provide protection. A Trust protects the asset and provides flexibility for an individual who creates this arrangement – the settlor. Having a Trust set up may be the best solution for some, so that intentions are fully met.
Westminster Law assesses individual’s circumstances and provides best advice in Estate Planning, which includes various Trust arrangement options.
Why should I set up a trust?
A Trust is a powerful preservation tool for your assets, which protects settled assets from possible uncertainties that may occur in life. Trusts are also frequently used in financial planning to reduce IHT. Other reasons for creating a Trust may include:
- Providing for loved ones i.e. family, close friends
- Assisting a charity
- Passing property to those who cannot legally hold it, for example, minors
- Providing for disabled or vulnerable persons
- Protecting from creditors
You can discover more about the reasons to set up a trust in our case studies.
Are there ongoing fees and costs?
There is a variety of Trust arrangements available to people with different purposes and tax regimes. Depending on the type of Trust, there might be ongoing fees such as: Entry Charges or 10-year Anniversary Charges. However, we at Westminster Law assess your individual circumstances and provide solutions as to how to mitigate further fees and costs when managing a Trust.
Do you pay inheritance tax on a Trust?
When someone dies, their Net Estate may be subject to IHT, meaning that beneficiaries may lose up to 40% of their inheritance. A Trust can help mitigate a potential IHT bill for future generations. If assets are put into a Trust during the settlor’s lifetime and they survive for 7 years, they may potentially escape IHT at the time.
How much does a trust cost?
There are various types of Trusts with different purposes and tax implications. At Westminster Law we assess your individual circumstances, providing you with the tailored estate advice on the Trust type, to best suit you and your intentions.
Key benefits of our service for your peace of mind:
- Professional background and qualifications
- No hidden costs
- Convenient home visits
- Lawyers experienced in Will writing and Estate Planning
How Our Lawyers Can Help
- At Westminster Law, we have an expert team of Will and Trust lawyers, who understand the importance of setting up a Trust to keep your assets safe.
- We will be able to simplify the process, helping you find the perfect Trust for your situation, protecting your assets, as well as ensuring that your loved ones have long term financial stability.
Key benefits of our service for your peace of mind:
- Professional background and qualifications
- No hidden costs
- Convenient home visits
- Lawyers experienced in Will writing and Estate Planning
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Types of Trust
There are various types of Trust, and the individual will need to decide which type is best suited for their circumstances.
Discretionary Trust
This is a type of Trust where a beneficiary has no specific right to the income or capital of the Trust – distributions are entirely at the Trustees’ discretion. This type of Trust is best suited to someone who seeks the best level of flexibility.
Interest in Possession Trust and Life Interest Trust
These types of trusts provide a life tenant (the main beneficiary) with either:
- The right to receive income generated by the Trust assets, or
- The right to use assets held in the Trust, such as living in a property.
The life tenant benefits from the Trust for their lifetime, but they do not own the assets. Once the life tenant passes away, the Trust assets are typically passed on to other beneficiaries, known as remaindermen.
Immediate post-death interest Trusts
This is a type of Trust where a person has an interest in possession in settled property and both apply:
- The settlement was effected by a Will or intestacy
- The beneficiary became entitled to the interest on the death of the testator or intestate.
These Trusts are commonly set up for the benefit of a surviving spouse or partner.
Accumulation and maintenance Trust (A&M)
An A&M Trust is where one or more beneficiaries would become legally intitled to the capital of the Trust property or the income on attaining a specific age, not exceeding 25.
Bare trust
It is a Trust under which the capital is transferred by the settlor to the legal ownership of the Trustee for the sole benefit of the beneficiary or beneficiaries. This type of trust is ‘cast in stone’ once created and irrevocable.
Vulnerable persons Trust
The main aim of this Trust is to protect the inheritance of a vulnerable person while also ensuring tax efficiency based on the beneficiary’s tax position rather than under the usual Trust tax rules. This type of Trust is the best solution under circumstances in which a beneficiary or beneficiaries are disabled or minor children. *
*A Trust will qualify for special tax treatment if a beneficiary is a child who has not yet attained the age of 18 and at least one of whose parents has died.
Contact
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FAQs
What is the difference between a Will Trust and a Lifetime Trust?
A Will Trust is a type of Trust which is incorporated in a Will and created on the death of the testator. A Lifetime trust is created during the lifetime of the settlors.
How do Trusts work in Wills?
A Will Trust or Testamentary Trust is instructed for in a Will. Usually, these are ‘Immediate post-death interest’ Trusts (IPDI), where after the death of one partner their share of the estate will be settled in the Trust for the benefit of the surviving partner, then distributed to further beneficiaries on the death of the survivor.
Can a Trust be challenged?
Trusts can potentially be subject to legal challenges. However, unlike Wills, the grounds for the challenge differ. Challenges may arise if the settlor lacked the necessary mental capacity when executing the Trust deeds, and / or was subject to undue influence. Another example could be when the trustees fail to exercise their fiduciary obligations such as mismanaging the Trust property or acting negligently. In this scenario beneficiaries can dispute a Trust.
Who can act as a Trustee?
The trustees are the legal owners of the Trust property, and their main role is to manage the Trust fund as if they owned it outright. Trustees can also be a beneficiary of the Trust at the same time. The only restrictions are that a trustee must be aged 18 or over and of sound of mind.
Can the joint tenants have one?
If individuals own property as joint tenants, on the death of the first, the survivor inherits the deceased’s share by the rule of succession. In this case, joint tenancy should be severed – converted to tenancy in common, whereby each person owns a share of a property.
Can I sell a property in Trust?
Yes, generally Trusts are flexible, and the terms will allow trustees to sell the Trust property, maintaining a high level of flexibility for the Trust beneficiaries.