Creating a Trust
When considering what happens after you pass away, the desire to help and support loved ones financially will be high up on your list.
By setting up a Trust, you can create that peace of mind and certainty that you are providing for those closest to you when the time comes.
Creating a Trust, either during your lifetime or upon your death in a Will, and using the help and expertise of the team at Winns, is an important part of your future financial planning and shouldn’t be put off until tomorrow.
What is a Trust?
A Trust is a method of managing assets – these can be financial sums of money, investments, land or properties – on behalf of people. There are a variety of different types of Trusts which are usually taxed differently.
Involving a Settlor (the person who puts assets into the Trust), a Trustee (the person who manages it), and the Beneficiary(ies) (the person or people who receives the assets held in the Trust), it is a way to ensure chosen people receive what they’re entitled to in terms of inheritance from an estate following a death or from a lifetime Trust.
Why are they used?
Trusts are utilised for a number of reasons. Based on particular circumstances, they can be used to control and protect assets, keep hold of assets on behalf of someone who is too young to receive them, or keep assets secure if someone cannot handle them due to being incapacitated.
They can also be employed to pass on assets while a person is still alive, and when a person has passed. It may also be an option if someone dies without a Will.
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When can a Trust be created?
Creating a Trust can happen at any time in your life, and it is advised to use the services of a legal professional who specialises in this to help you do it. The team at Winns has decades of experience in setting up Trusts and will be able to support you through the process.
Our team will help you set out what assets are being considered, confirm who the trustees and beneficiary will be, and when you wish the Trust to become active.
It’s important to note you’ll need to nominate at least two trustees, who you know and trust to handle matters, and who are happy to take on the role. It is also commonplace for Solicitors to work with Accountants when relevant in creating Trusts too.
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What type of Trusts are available?
There are a number of different kinds of Trust, so it is important you choose the option that’s right for your circumstances. Here are some examples of common Trusts:
- Bare Trust – This is the most basic type of Trust, commonly used in Wills where assets are given to the named beneficiary as long as they achieve a specific age. For example often 18 years old or over. The assets are held in the name of Trustees, but the beneficiary receives the assets at any time after they turn 18.
- Interest in Possession Trust – The beneficiary receives access the Trust fund straight away in terms of receiving income / residence to a property but can’t control the assets that provide the said income (this money is subject to paying income tax on it).
Discretionary Trust – This is a trust whereby the Trustees have total control over the assets and the income they generate, meaning they dictate how and when Beneficiaries receive from the trust. They could be following a letter of wishes left for them or some guiding principles. This is frequently used when children or grandchildren are the beneficiaries, with their parents being the trustees.
Mixed Trust – This merges the principles of different trusts together, for example a beneficiary might have access to income from half of the trust (interest in possession trust) and the remainder be on bare trust.
Trust for a Vulnerable Person – This applies if the beneficiary is classified as vulnerable in terms of the HMRC definitions, for example they could be an orphan or disabled, meaning they have more favourable tax benefits.
By discussing these with a legal professional, like those available in the Wills, Probate & Trusts department at Winn Solicitors, you will receive the relevant guidance and support required when creating a Trust.
Why is a Trust useful?
Using a Trust to help facilitate the passing on of assets to designated Beneficiaries provides that peace of mind and certainty that specific assets are going to the people you want to receive them. Especially when considering children or people under the age of 18, by holding assets in a Trust, it allows them to receive them when they turn an appropriate legal age.
Why should I use a legal expert to help when creating a Trust?
With such variety in the types of Trust available, it is important you make the right choice for your circumstances. By contacting the Wills, Probate & Trusts team at Winns, they can discuss your situation, identify the specifics and provide guidance on what best suits your needs. You’ve also got that reassurance that the process is being handled by someone with experience, who will diligently ensure all aspects are covered.
How can I contact Winns?
The team at Winns is here to help with setting up a Trust. There are a number of ways you can contact us; by phone, or you can request a callback for a time to suit you. Alternatively, start a Live Chat on the website today.
Do you know how to set up a Trust?
If you are interested in setting up a Trust, and keen to know how to create a Trust, you should start by speaking with a professional. They will be able to provide you with the necessary advice and if you wish to proceed they will draft a set of Trust Deeds for you, incorporating all of the relevant terms as well as appointing appropriate Trustees.
How much does it cost to create a Trust?
Costs for Trusts vary depending on the type of Trust to be set up and the type of advice required. We offer a fixed fee for a one-hour consultation to explore your personal circumstances and provide you with some advice on the suitability of a Trust to achieve the outcomes you wish. If you then decide to proceed with the Trust we will provide you with a fixed fee quote for its creation before any further work is carried out.
Do you need a solicitor to set up a Trust?
It is always best to seek professional advice when considering doing something as important as setting up a Trust. A Solicitor is one of the professionals you should speak with together with an accountant and potentially a financial advisor to cover all elements.
What are the three types of Trust?
There are many more than three types of Trust and the type of Trust you require will depend on your personal circumstances and the goal you are trying to achieve in setting up the Trust.
Do you pay inheritance tax on a Trust?
This will depend on the type of Trust, the assets to be placed into the Trust, and the value of the overall estate of a person.
Is it better to have a Will or a Trust?
There is no simple answer as this depends on the circumstances of a person and what you are trying to achieve. In some circumstances, a Will should be sufficient for what you are trying to achieve and you can even incorporate a Trust, which would begin at your death, into your Will. In other circumstances, in order to achieve the outcomes you require, you may need to set up a standalone Trust throughout your lifetime.
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Rebecca Harbron Gray
Head of Wills, Probate & Trusts
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