WINTERBORNE LEGAL SERVICES
Trusts have been used by families for hundreds of years.
They create an obligation upon the Trustees, who are trusted to hold and manage the trust property on behalf of the beneficiaries. The trust property could be land, money, investments or a combination of all three.
Trusts began as a way of passing ownership of property to a person (the Trustee) who would manage the property whilst the heir was a minor. Trusts are still used for this purpose today and they are also used in Wills where:
- You are in a second or subsequent relationship and wish to provide for your current spouse or partner but still ensure your property ultimately passes to your own children;
- One of your children may be in a difficult relationship or having financial difficulties and it is not appropriate for them to receive money;
- You may wish to provide for someone to live in your home for as long as they need, but still wish that eventually it will pass to your own children;
- You need to provide for an individual who is disabled, either physically or mentally.
There are two main types of trust.
One type of trust gives one or more beneficiaries a fixed interest or entitlement. This could be a right to receive trust income or a right to live in a property. This right could exist for the lifetime of the beneficiary, or for a shorter period. After the right has come to an end, the asset in the trust passes to other named beneficiaries.
The other type of trust is used where it may be difficult to predict the needs of various beneficiaries. The Trustees are given the discretion to make payments of capital or income to any one or more of the beneficiaries during the lifetime of the trust.
There is also a hybrid trust for disabled beneficiaries which combines the attributes of the fixed interest trust and the discretionary trust.
The different types of trust are subject to different regimes for income tax, capital gains tax and inheritance tax.
It all sounds quite complicated and in many ways, it is. But trusts and Will trusts offer benefits and protections for your family which you may not be able to achieve in any other way.