Trusts- Guide

A comprehensive guide to Trusts in the UK: 

"Trusts have a reputation as mysterious legal instruments (or financial frameworks) favoured by the rich and used to avoid tax. While wealthy people may use them, their use is much more common than many people might think.

Trusts are no longer effective as means of reducing tax liabilities. The Government brought trust taxation into line with personal and corporate taxation rates so that there is little tax advantage of creating a trust – especially when the cost of administering one is considered. Instead, trusts allow better control over how assets are used and managed.

Trusts (and all they entail) is a vast topic. This concise guide helps you catch up on the vital aspects. Let’s start with the basics…"

 Netlawman- Guide

Trustees: their role and powers: 

"A trustee is someone who is given legal responsibility to hold property in the best interest of or for the benefit of someone else. As the name implies the trustee acts under a trust to do what is best and to act in the interests of others (the beneficiaries) and not himself. The Law has always categorised the relationship of a trustee to a beneficiary as being one of utmost good faith." 

Netlawman-  Guide

Choosing Executors, Trustees and Guardians: 

• Guardians of your children under 18 years
• What do executors do?
• Do you need an executor?
• How many executors should you appoint?
• Renouncing probate
• Trustees
• Who can be an executor?
• How to help your executors and trustees
• Further information

Netlawman- Guide

Will Trusts: 

"A trust is an arrangement whereby one or more people (known as the trustees) hold property for the benefit of one or more other people (known as the beneficiaries). When the property is money or a collection of assets, it is usually referred to as a trust fund.

Trust powers are what you say your trustees can do or must do. Powers can be as wide ranging or as narrow as you want, but be careful to make sure that what you ask can be done. If it turns out that the trustees cannot do as you ask, then they may have no alternative than to ask a judge, and spend trust money on legal fees"

Netlawman- Guide

Deeds: clearing the confusion on what a Deed is, when to use one and why: 

• Creating a Deed
• Delivering a Deed
• What are the advantages of a Deed? Why use one rather than an agreement
• Summary

 Netlawman- Guide

Trusts: the IHT nil rate band, Discretionary Trusts and the 2-year concession: 

"The only certain things in life are death and taxes', so let us make clear that there is no magic bullet to save tax.

Some advisers on wills may try to persuade you to enter into one of the tax schemes you see advertised in the newspapers. They may be paid commission when you join. We can say that any scheme to save tax is risky in that:

• it may not succeed under today’s law
• even if good now, the law may be changed before you die or make another will
• it is probably very expensive
• if it fails, the tax may be payable by some person who least expected the bill

Having said that, there are some ways of writing your will so that you are likely to pay less tax.

A nil rate band discretionary trust as used before October 2007, is now ineffective to save tax. However, it can still be useful to use a discretionary trust. Here are some advantages you might like to consider:

• Because assets placed in trust are not owned by the surviving spouse or partner outright, they are not available to fund compulsory, means tested care fees.
• Assets left to the survivor outright could be spent or given away or taken by creditors or by a new spouse and so on, and so not be available for the intended original beneficiaries (likely to be the children of the first to die).
• The investments you place in a nil rate band trust may increase in value much faster than the nil rate allowance each year. So, by having placed then in a nil rate band trust, a greater value is free of tax than if the same investments were given to the survivor absolutely (no trust).

Of course, there are many possible reasons to use a trust that are unrelated to saving tax. If you want a trust anyway, the above points count as a possible bonus and the points below may be unimportant."  

 Netlawman- Guide

Life interests, debts and taxes:

"A life interest is exactly that, a beneficial interest during a lifetime, but not ownership.

To create a life interest, property is transferred to trustees who hold it according to the instructions contained in the trust deed (in this case, your will) during the life of the beneficiary.

Your will also says what you want to happen after the life beneficiary dies. That later gift is called a gift over and the people who receive it are known as the remaindermen." 

 Netlawman- Guide

Creating property & Asset Protection Trusts in your Will:

"Creating a property protection trust (sometimes called an asset protection trust) through your will allows someone to benefit from your estate after you have died as if he or she owned the assets, without actually inheriting it. The value of his or her estate is therefore kept minimised.

In law, there is no such thing as a property protection trust. The mechanism is a standard trust where a beneficiary has a life interest. The name is used in marketing, presumably because the idea of “protecting” your assets from the state is appealing enough to want to pay higher fees for the writing of “special” terms into your will by a professional." 

 Netlawman- Guide

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