Trusts can be used for tax planning preservation of wealth through generations and preservation of benefits. They can be used to define various shares in property. They can also be used for charitable purposes or simply as a means to support someone who may be in financial difficulties or may simply not understand how to deal with money. Trusts can be set up by Deed during a client’s lifetime or by their Will which come into being on their death.
If you are Trustee who needs advice on your duties or administration of a trust, you are thinking of setting up a trust or you need assistance on any aspects of trust and trust law please contact our Trust Manager Alan Edge on 01425 484848 or by email alan.edge@ellisjones.co.uk
The article below outlines some of the trusts that are available and their features:
| Discretionary Trusts | This is where cash or other assets are put in trust for two or more people so there are a number of beneficiaries who can benefit at the Trustees discretion. There can be a principal beneficiary and not all potential beneficiaries will receive a benefit. Clients are encouraged to give guidance to the Trustees in a letter of wishes. Useful for holding assets out of a client’s estate, this type of trust has its own Inheritance Tax Nil threshold and tax return. |
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| Life Interest Trusts | Here funds are set aside for the lifetime of one person this may be a spouse or partner (called a life tenant). That person has the benefit of the interest and income earned during their lifetime but the client directs where the capital invested is to go on the life tenant’s death |
| Bare Trusts | Here funds are held for someone who is absolutely entitled, this maybe for children when they are 18 or possible for someone who would not be able to look after the money themselves. This means any tax considerations are due on the beneficiary. |
| Declarations of Trusts | These are used to define interests in land or property perhaps one party has put more into the purchase than the other so this document sets out how the eventual sale proceeds should be divided |
| Personal Injury Trusts | These can either be a discretionary trust or bare trust. The funds are held by trustees not the client who has suffered the injury and received a cash sum in settlement. This sum is then not included in any benefit calculations which may cause the benefit to be reduced or removed altogether. |
| Trusts for Disabled Persons | These are special trusts designated as such for the benefit of a disabled person by the Revenue and give favourable tax considerations for the disabled person. They can be either discretionary or bare trusts |
| Trusts for Minors | Held for children under 18 typically as a gift from grandparents. |
| Pilot Trusts | Used as part of Inheritance Tax planning can be either Discretionary or Life Interest Trusts |
| Charitable Trusts | Set up to provide income for charitable giving. They need to be registered with the Charity Commission and annual reports and accounts submitted. |
Each type of Trust has its’ own tax rules and procedures.
Our experienced Trust Manager, Alan Edge, can assist you with any aspect of trust administration. You can call Alan for a no obligation chat on 01425 484848 or Email him alan.edge@ellisjones.co.uk
