What is a Trust?
A trust is created when you give assets (such as property, shares or money) to a small group of people (the ‘trustees’) and tell them to hold onto those assets on behalf of one or more different people (the ‘beneficiaries’).
A trust can be made during your lifetime or within a Will. Generally, the terms of the trust have to be written down so that everyone knows where they stand.
Why make a trust?
Generally, trusts are made for one of two reasons:
- 1. Tax – for example to give assets away so as to avoid paying inheritance tax on those assets when you die; and
- 2. Family planning – you may want to give assets to your children but are worried about them being too young, or losing those assets in a divorce. By putting the assets into trust you can protect against these problems.[/checklist]
Common examples of when trusts might be used are as follows:
Holiday homes: You might want to put a holiday home into a trust so that all the family can use it, but you won’t have to pay inheritance tax on it when you die;
In a Will: If you are married or have a partner, using a trust in your Will can help save on inheritance tax when one or both of you dies;
Care home fees: If you put your home into a trust, you may avoid the local authority being able to assess your home as part of your assets when deciding whether you can afford to pay care home fees.
Why can’t I just give my assets outright to who I want?
Some people wonder why they need to use a trust – why not just give your assets straight to whoever you want? The following are some of the reasons why that may not be a good idea:
Control: If you give assets to a trust and you are one of the trustees of it, you have control over whether the asset is sold or not. There have been lots of cases of people giving assets (even their homes) straight to their children, who then go on and sell that asset straightaway, even if they have promised not to.
Capital Gains Tax: If you give an asset straight to someone, you will have to pay capital gains tax if it is worth more now than it was when you bought it – even though you haven’t actually sold it. If you use a trust you can in certain circumstances avoid paying that tax straightaway.
Divorce/bankruptcy: If you give an asset to someone it will be counted as theirs if they get divorced, are made bankrupt or even die. This could mean that the asset is lost in a way that you never expected. If you use a trust this shouldn’t be an issue.
How do I make a trust?
You should speak to a trust solicitor to make a trust. There are different types of trusts and a trust solicitor can advise you on which one is the most suitable for you. Trust solicitors can also ensure that you are aware of any affected tax before you do anything.
If you are an executor or a member of a family who has recently suffered a loss, then you may require legal assistance. Whilst there may be an appropriate and current Will in place, you may be faced with dealing with an Estate that is less well-prepared. Read more
Whether single, married or a parent, Wills are a key element in Estate planning and, without one, you are unable to control what happens to your assets after death. You may leave your dependents with numerous problems, including an unmanageable tax burden. Read more
Please call us on 0207 183 0084 or email us on firstname.lastname@example.org for further insight into creating a trust, making a will or discussing your probate matter.
Before we meet
When you first meet with us, the most important thing is to bring yourself and not to worry. However, we will need to gather quite a lot of information about your case and so it can be helpful if you come armed with some essential information, then we can ensure that the time we spend together is most productive for you.
The contents of this page are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this page.