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Do I need to consider setting up a trust?

Do I need to consider setting up a trust?

A ‘trust’ exists where one or more persons hold property on behalf of and for the benefit of another or others. Those who hold the property are known as ‘trustees’.

 

Trusts can be expressly created (in a will, for instance) or they can come into effect by operation of the law (in other words, the law sometimes recognises that a trust exists whether or not this is the label used to describe the arrangement by the people involved and irrespective of them being aware of it or not).

 

There are different types of trust which can be created. Some of the trusts which you can consider including in your will are ‘Discretionary Trusts’ or ‘Life Interest Trusts’.

 

A ‘Discretionary Trust’ is one where the beneficiaries (i.e. those who you want to benefit from the trust) are not individually entitled to a particular share of the trust fund (the assets in the trust). Indeed, in many cases the trustees will have the power to use all of the trust fund for the benefit of one beneficiary to the exclusion of the others, if they so choose.

 

This type of arrangement may be suitable, for instance, if you have young children and feel that in the future one of them may need a little more help than the others to establish themselves in life. You might then think it appropriate to place assets into a Discretionary Trust so that your trustees would have the flexibility to provide greater financial assistance to one child if it was necessary.

 

You might also consider setting up a Discretionary Trust if you want to try and ensure that your resources are used for a specific purpose, such as to pay for your children’s education if you die before they reach university age or to help them buy houses as they get older.

 

Life Interest Trusts’ are different. These involve placing assets into a trust for the benefit of one beneficiary for the duration of their life, and when they die the asset then becomes the property of another named beneficiary (or beneficiaries).

 

A common example of a Life Interest Trust is where someone dies and gives their home to their significant other for their life and then to their children when the significant other passes away. In most cases this allows the significant other to continue to live at the home or rent it out and receive the income until she dies, at which time the children will the become absolutely entitled to the property.

 

Trusts can also be set up during your lifetime, when they can be used to good effect for a number of estate and tax-planning reasons.

 

At Hutton'sour experienced solicitors will advise you fully of all of the options available to you, and will help you decide what is right for you and those you care about most.

 

 


Contact Us

Please contact Clare Strowbridge or Ian Moore to discuss your requirements and find out how we can help you.

 

 

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Nothing on this website constitutes legal advice. Please contact us for advice on your individual circumstances.

 

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