Setting Up a Trust
At AWH, we can help you to set up a trust to ensure that your assets are protected, and that your loved ones will have the financial security that they need after you pass away.
We can help you to decide what kind of Trust fund suits your circumstances, and we will support you throughout the process of setting it up.
Our specialist wills and probate solicitors can help you with any queries you may have, contact us today on 0800 999 2220 or request a call back online and we will call you.
UK Trust Funds
Although there are many different types of Trusts, there are always three different roles played with a trust fund. Each person has different rights and responsibilities.
The three roles within a Trust fund are:
- The ‘Settlor’, who puts the assets into the Trust,
- The ‘Trustee’, who manages the Trust, and
- The ‘Beneficiary’, who benefits from the Trust.
The Settlor is also the person who decides how assets in a UK Trust fund should be used. They will usually have to confirm this in a legally binding document called a ‘Trust Deed.’
Trustees are the legal owner of any assets that are held in a trust fund and have to deal with them according to what the Settlor has writer in their trust deed or will. Trustees also have the responsibility to pay any tax due from the trust fund. There can be multiple Trustees, but there must always be at least one.
Beneficiaries can benefit from either the income from a trust fund, the capital from a trust, or both. The income might be rent from a property included as an asset in the trust fund, and the capital might be a share in the value of a trust fund when they reach a certain age. There can be multiple beneficiaries included in a trust fund.
What kind of trusts are there?
There are a number of different types of trusts, and each one has different requirements, restrictions and tax rules. Establishing what type of trust fund to set up can be a confusing process, but luckily we are here to help you choose what type of Trust is best for you and your family.
We can help you choose a trust type and can support you through the process of setting it up. We’re always on hand to answer all questions you may have.
The seven main types of Trust fund are:
This is where the assets are held in the name of a Trustee, but the beneficiary of the Trust fund has the right to all capital and income at any time once they are over 18. You might use this type of trust fund to pass assets onto your children or grandchildren.
Interest in Possession Trusts
This is where the Trustee has to pass on all income from the trust fund to the beneficiary as it is earned. You might opt for this type of Trust fund if you want someone to benefit from the earnings from assets, such as rent from a property, but do not want to give them the assets themselves.
This is where the Trustees are entitled to make certain decisions about how trust fund income is used. Depending on what you write into the Trust Deed, you might enable your Trustees to decide what gets paid out, how often payments are made, and any conditions of payment to your beneficiaries.
You might use this type of trust fund if you want to put money aside for the future needs of beneficiaries who are unable to deal with assets themselves.
With an accumulation trust fund, your trustees can gather income within the trust to increase its capital value. Like with discretionary trusts, your trustees may also be able to pay income out if you have it written into the trust deed.
A mixed trust is a combination of more than one type of trust fund. Different parts of the overall trust fund will be treated according to that specific type of trust’s tax rules.
You might choose a mixed trust if you have a range of beneficiaries with different needs, in which case one trust type will not suit everyone.
A settlor-interested trust is where you or your spouse or civil partner will directly benefit from the trust fund. It could be an interest in possession trust, an accumulation trust or a discretionary trust.
You might choose this type of trust is you want to put aside money for yourself and your partner in the future. People who have their working lives cut short due to illness would greatly benefit from this type of trust fund.
Trust funds: Non-resident trusts
This type of trust fund is set up where the trustees are not residents of the UK. These types of trusts can be very complicated due to the tax rules that apply, but they are possible to set up.
How to set up a trust fund
No matter what type of trust you want to set up, you need to get an experienced wills and trusts solicitor to assist. We can help you establish what trust fund suits would suit your needs best and will work with you to set it up.
Setting up a family trust fund
Setting up a family trust is a good idea if you want to protect your assets and keep them belonging to your family after you pass away. You can set up a family trust if you are in a marriage or civil partnership, whether you have children or not.
There is no one set family trust fund, but instead you have the opportunity to set up one of the following types:
- Family trust funds: The bare trust
- Family trust funds: The interest in possession trust
- Family trust funds: The discretionary trust
The type of family trust you opt for will depend on your circumstances, who you want to benefit and how you want them to benefit.
Setting up a trust for a child
Parents or grandparents can set up trust funds for children who are under the age of 18. The child must have never been married or in a civil partnership in order to benefit from the trust. If you want to set up a trust fund for a child, our solicitors are here to help.
Setting up a trust fund to avoid Inheritance Tax
Inheritance Tax is a type of tax that your family may have to pay on your estate after you pass away. Inheritance Tax is due at 40 percent of any estate worth over £325,000.
Many people think that setting up a Trust fund is a good way to avoid your family having to pay Inheritance Tax, and although this can be true, it isn’t the sole benefit.
There are some instances in which a trust fund may be beneficial for saving or avoiding Inheritance Tax, but it is not advisable to simply set up a family trust fund to avoid inheritance tax, because in reality exemptions will only apply to trusts where the beneficiaries would be severely worse off by paying the tax.
We can provide you will all the relevant information you need and help you to make a decision about whether it would benefit you.
Get in touch to set up a UK Trust with AWH Solicitors.
What is a Trust fund and how does it work?
A Trust fund is a way for people to manage and protect their money, property, land and investments. There are seven main types of Trust funds, all with their own rules, requirements and benefits.
Within a Trust there are three roles: the Settlor, the Trustees and the Beneficiaries. These three roles have different functions depending on what type of trust fund they are in. Their functions will usually be written into a legally binding document called the 'Trust Deed'.
How do you set up a Trust fund?
You set up a Trust fund by employing the services of an experienced Trusts solicitor. Trusts cannot be legally binding unless they are set up and overseen by a legal professional.
The terms of a Trust fund usually needs to be confirmed in writing in a 'Trust Deed', which will detail who your trustees and beneficiaries are as well as their roles and responsibilities in regards to the Trust.
How do Trust funds pay out?
For most Trusts to pay out, the settlor or trustees must give their permission for the money or other assets to be released to the beneficiaries.
However, Trust funds pay out in different ways depending on what type of Trust it is and what the terms written into the 'Trust Deed' are. For example, some Trust funds, specifically those set up for children, will only pay out once the child reaches 18.
How do I dissolve a Trust?
How you dissolve a Trust depends on what type of trust you have set up in the first place. In any dissolution, all assets within the Trust must be distributed according to the terms that are set out in the 'Trust Deed'.
HMRC also need to be notified that the trust is being dissolved in order for the process to become complete.