A trust is a legal arrangement that allows a third party, known as a trustee, to hold assets on behalf of beneficiaries.
The assets in a trust can include property, investments, cash, and other valuable items.
Trusts are often created for the purpose of protecting assets, minimising taxes, and providing for beneficiaries.
There are several types of trusts available in the UK, each with their own unique benefits and drawbacks. Some of the most common types of trusts in the UK include:
These trusts allow the beneficiary to take control of the assets at any time, as they are considered to be the legal owner of the assets.
Bare trusts are often used to hold assets for minors until they reach the age of eighteen.
These trusts allow the trustees to decide how and when the assets are distributed to the beneficiaries.
Discretionary trusts can be useful for providing for beneficiaries who may not be able to manage their own finances, such as those with disabilities or if you want a large range of people to benefit.
Interest in possession trusts
These trusts provide a beneficiary with the right to the income generated by the assets in the trust, but not the assets themselves.
Interest in possession trusts can be useful for providing a regular income to a beneficiary while preserving the assets for future generations.
There are some other trusts that you can create so be sure to consider all options when looking into this.
Why might you need a trust?
Placing assets in a trust can help to protect them from creditors and lawsuits.
Depending on the type of trust, you may be able to mitigate Inheritance Tax, Capital Gains Tax, and other taxes.
Creating a trust can help to avoid the probate process, which can be time-consuming and expensive.
Trusts allow you to control how and when assets are distributed to beneficiaries, which can be especially important if you have minor children or other beneficiaries who may not be able to manage their own finances.
Unlike Wills, trusts are not subject to public record, which can help to maintain your privacy and the privacy of your beneficiaries.
Of course, there are also potential downsides to creating a trust, such as the costs of setting up and maintaining the trust, as well as the potential loss of control over the assets placed in the trust.
It’s important to work with one of our qualified solicitors to determine whether a trust is right for you and to choose the right type of trust for your specific needs and goals.
For more information on this, get in touch.
Mander Hadley Solicitors is not only a long established firm, but is vibrant and successful, with a forward thinking approach.
Latest posts by Mander Hadley (see all)