Trusts can be used to help you – the Settlor - better manage your assets. These types of legal arrangements are typically used to protect the things that are dear to you; help you choose who will receive benefits from your estate; and allow you to control the administration of legacies to beneficiaries who are under 18 or who are particularly vulnerable.
Place your property and your other assets into a trust, and technically they will no longer belong to you, because you have transferred ownership to the Trustee. This means that their value will not usually be counted when it comes to calculating the inheritance tax that is due on your estate – and this can significantly reduce the amount you have to pay to HMRC.
Trusts can be incorporated into your Will, either by yourself or by a specialist Will writer. You need to make sure that you include information on the things that you wish to be placed into the trust, who the Trustee and your beneficiaries are, and whether the trust will become active straightaway while you are still alive, or immediately after you pass away.
The different types of trusts
There are many different trusts available. They range from simple to complex, and each offers its own benefits. Three of the most common arrangements are basic trusts, interest in possession trusts, and discretionary trusts. Our trust planning specialists will be able to talk you through the pros and cons of each.
The type of trust you choose to set up will also depend on whether you own a property with another person as a Joint Tenant or as a Tenant in Common.
You can check which arrangement you currently have by inspecting the Title Deeds or inspecting its records at the Land Registry (or we can do this for you). If you are not happy with your current arrangements, we can help prepare all the necessary documentation to support your change in ownership rights.
Who can benefit from a trust?
You should think about setting up a trust (or trusts) if you:
• Are married, unmarried or in a civil partnership, and own a property with someone else
• Want to protect your property’s value for the benefit of your loved ones
• Want to protect the property’s value from being used to calculate residential care fees for your surviving partner
• Want to make sure your property goes to your intended beneficiaries, even if your surviving partner remarries or writes a new will