Trust solicitors

A trust is a legal arrangement for managing assets such as money, investments, land, or property for the benefit of specified people.

Assets are placed in the trust by the ‘settlor’ and appointed ‘trustees’ then manage the assets ('trust property’), for the benefit of others (‘beneficiaries’). The terms of the trust document the ‘trust deed’ will govern how the assets in a trust should be used.

There are a number of different types of trusts, which are taxed differently.

Trusts can be set up at any time or written into your will. They are complex legal instruments, which must be watertight and worded with precision to ensure they meet individual needs and requirements and maximise opportunities. A specialist trust solicitor can advise on the creation of trusts and all aspects of trust administration and taxation and we would always recommend clients seek expert advice.

There are a number of different types of trusts, each to be used in different circumstances. The different types of trusts are:

Bare trusts

A bare trust is the simplest type of trust. Assets in a bare trust are held in the name of a trustee. However, the beneficiary has the right to all of the capital and income of the trust at any time, after they reach the age of 18. As the assets always go directly to the intended beneficiary, they are often used to pass assets to young people – the trustees look after the assets until the beneficiary is old enough to inherit.

Interest in possession trusts

These are trusts where the trustee must pass on all trust income to the beneficiary as it arises (less any expenses) but the beneficiary does not control the assets that provide the income.

Interest in possession trusts are typically used to provide for a spouse for the rest of their life. Upon the death of the surviving spouse, the assets in the trust can then be passed on to the capital beneficiaries outright, often the children, and in such circumstances the trust will come to an end.

Discretionary trusts

Discretionary trusts are where the trustees have discretion as to how the trust’s assets and the income they generate, are distributed between a defined class of beneficiaries.

This type of trust is very flexible and can very useful for estate planning purposes.

Settlor-interested trusts

Settlor-interested trusts are where the settlor or their spouse or civil partner benefits from the trust. The trust could be an interest in possession trust, or a discretionary trust.

Trusts in Wills

trust that is included in a Will comes into effect after the settlor has died. These trusts will be discussed when preparing a Will and are an important part of any estate planning.

Anyone can be a beneficiary of a trust, including:

• A named individual,
• A group of people, such as children and grandchildren
• A charity or charities
• A company, or organisation, such as a sports team.

By choosing a group of people, such as 'grandchildren' you can include people who haven't been born yet. This is often used when providing for the next generation.

A beneficiary can also be a trustee of the same trust that they benefit from. However, it is advised to have at least one trustee that isn't a beneficiary.

Anyone can be a trustee as long as they are:

• Over the age of 18,
• Of sound mind,
• Not bankrupt or disqualified from acting as a trustee for any reason.

It is advised to name at least two trustees, and you should ensure that they are happy to take on this responsibility.

Anything that you own can be placed in a trust. This can happen during your lifetime, or written in your Will in the event of your death. Assets you can include are:

• Property and land - such as family homes, investment properties, land.
• Personal property - such as art, heirlooms, jewellery, valuable collections.
• Financial assets - such as much money, shares, stocks.
• Life Insurance can be paid out into a trust.