It’s a common problem: you hear about trusts all the time but in truth you don’t really know
how they work. Without expert advice, how can you be sure a trust would benefit you and
your family? And which type of trust should you choose?
We’re here to help.
As the person putting the assets (such as property or money) into the trust, you are the
There are many different types of trust and finding the right solution for your specific needs
and circumstances is critical. Each type of trust is taxed differently, which might also
influence your thinking.
Are you worried your local authority might have the right to sell your house to pay the costs
of your future nursing home care? Or are you concerned that if your husband remarries after
your death, he will leave your share of the family home to his new wife and not to your
children? If these kinds of issues are weighing on the minds of you and your spouse, you
should consider including protective property trusts in your wills.
If, however, your concern is to support a vulnerable person (such as a disabled child), you
might want to investigate discretionary trusts. Firstly, you’ll need to know a ‘trustee’ is
someone you, as the settlor, name to manage the assets held in the trust for the good of one
or more beneficiaries. In a discretionary trust, the trustees can make decisions on how to use
the income from, and sometimes the capital in, the trust. (As settlor, you can also be a
trustee.) Trustees might therefore decide which of multiple beneficiaries should receive a
particular payment, how often payments are made or whether any conditions should be
imposed on the beneficiaries. If, for example, you have a grandchild likely to need greater
financial support through his or her life than your other grandchildren (who can also be
beneficiaries), you might want to consider setting up a discretionary trust.
What if you simply want to pass assets to someone currently too young to handle their
financial affairs? A bare trust might be the perfect solution for you. In this instance, the
beneficiary has the right to all the capital and income (such as interest earned on money) at
any time as long as they are 18 or older. Until the beneficiary reaches that age, trustees
manage the assets in a bare trust.
Protective property trusts, discretionary trusts and bare trusts are just three of many options
available to you. You can even establish a mixed trust, in which different types of trust are
combined, with each part of the trust addressed according to the tax rules that apply to that
specific part. Setting up the right trust for your situation is often a very complex matter and
you should never proceed without expert legal guidance. Why not call us now, at
DeborahWilkinson & Co. , for more advice?