A suitable manner to govern the succession

The setting up of a trust is often the most suitable manner to govern the succession of assets or to reduce tax liabilities or third party claims against assets.

What is a Trust?

There are various different types of trusts and in simple terms, a trust is a way of managing assets (such as properties, shares, investments etc.) for certain people. The people responsible for managing the assets are called the trustees and the people who benefit from the assets are called the beneficiaries. A trust is created via a trust document which contains certain rules and conditions which the trustees and beneficiaries must comply with. The trust can last for a maximum of 125 years under law.

Why make a Trust?

There are various reasons as to why trusts are set up, but the two main reasons are asset protection and tax savings.

You may wish to gift a home to your child or children but fear that it may be lost by the financial imprudence of the child, or via factors beyond your control such as a claim made by a spouse on the divorce of the child. Trusts can be used to ensure that assets are protected against the claims of third parties. With the use of trusts, the assets can be protected if the beneficiaries are going through a divorce or bankruptcy. In addition you can appoint yourself and/or spouse as trustee(s) of the trust fund, in order to retain control over the asset.

Trusts can also be created during lifetime as part of a “lifetime” planning strategy, or on death through what are known as Will trusts. This reduces your own wealth and thus your exposure to inheritance tax. Additionally, placing assets into trust can also be advantageous for income tax purposes, as individual beneficiaries annual income tax free allowances may be utilised in order to reduce or eliminate income tax on rental income for instance.

In either case, we can explain to you exactly what type of trust is most suitable for your particular needs and what the benefits of using such trusts are. We also have experience in managing trusts and can either work with you regarding the management of the trust or effectively manage the trust on your instruction.

Other things to consider

Once the assets are placed into trust, they are bound by the rules of the Trust, which are detailed and complicated. Therefore, it is important that you obtain comprehensive advice before setting up a trust. There may be inheritance tax, income tax and capital gains tax implications as well as tax returns to file on a yearly basis. We are able to not only set up the trust but also continue to manage the trusts accordingly.

For more information, please call us on 0121 603 0077 or email info@iwillsolicitors.com for a free no obligation consultation.