A Trust is a legal arrangement in which a person (the Settlor) transfers the ownership of some of his or her assets to one or more Trustees, who manage the assets on behalf of one or more Beneficiaries (who will receive the assets or income).
There are many reasons why this would be done:
- The Beneficiary is under age and therefore too young to handle their own affairs
- The Beneficiary has limited mental capacity to be able to handle their own affairs
- To control and protect family assets
- To pass on assets while you’re still alive
- To protect family’s assets against care fees
- To save taxes
The Settlor decides how the assets in the Trust shall be used. This is all laid out in a document called the Trust deed. The Settlor can put all the assets that he wants to pass on to the Beneficiaries at once, or add to them later on.
It is the Trustees’ responsibility to look after the assets, pay any occurring taxes, and make investment decisions. There are usually two Trustees, often a lawyer and a family member, so that the right decisions are made that will benefit the family (the Beneficiaries). The instructions of the Settlor always have to be followed.
The Beneficiary will either receive income from the assets (such as interest or rent) or the capital itself (such as a portfolio of shares or a property), depending on the type of Trust that was created by the Settlor. Some Trusts will allow the Beneficiary to have income and capital.
A Trust can be either irrevocable, so that nothing can be changed once the Trust is set up, or revocable, where the Settlor can change his mind.
There are many types of Trusts which I will discuss in greater detail in a future blog post.
If you think that a Trust might be the right option for you, why not contact me, Amanda Harris, Your Local Will Writer. You can find out what my clients have said about my work on my website www.alhlegal-willwriters.co.uk/testimonials or get in touch by phone 0115 8780417 or email at firstname.lastname@example.org
Please get in touch if you have any further questions about Trusts.