Trust Solicitors.

In simple terms, a trust is a way to protect your assets and ensure that your loved ones have financial stability in their future. A trust is set up by a ‘trustor’ who will appoint a ‘trustee’ to act on behalf of the trustor after they’re deceased to benefit any beneficiaries.

The rules on how the trustee deals with the estate will depend on the terms and conditions on which the trustor built the trust. For example, the trust can dictate the terms of the inheritance for the beneficiaries to pass assets to specific beneficiaries at different times. For this example, typically, a spouse will receive a lifelong regular income, and other beneficiaries receive what’s remaining once the spouse has passed away.

If you have any questions regarding setting up a trust, please contact our solicitors directly on 0203 007 5500.

As the terms and conditions of a trust vary on a case by case basis, the pros and cons depend on each trust. However, some common pros and cons of creating a trust include:

Pros:

• Protect the trustor’s assets. For example, if the assets were distributed to the beneficiaries and one of the beneficiaries got a divorce, it puts the assets at risk.
• Tax planning. Having a trust in place can ensure that you reduce or avoid inheritance or estate tax.
• Privacy. A trust can ensure that you don’t need to go through probate, which is public. Therefore, it can avoid people seeing the size of the estate, who you owed debts to and who will receive your assets.
• Prepares for potential loss of mental capacity. If you lose the mental ability, it makes life difficult for your loved ones as they won’t legally be able to manage your assets. Placing your property into an estate planning trust gives your trustees the ability to manage your trust if anything was to happen to you.
• Simplifies the probate process. In some cases, estate planning trusts can simplify the probate process following your death. Probate can be made more straightforward because the transfer of the ownership of your property has already happened, and so does not have to go through probate.

Cons:

• Irrevocable. Depending on the terms and conditions of the trust, you may not be able to revoke the trust.
• Expensive. Again, depending on the terms and conditions of the trust, it can be costly to establish and maintain.
• Avoidable mistakes. Mistakes when creating a trust can prove to be costly. For example, if you don’t receive the correct tax advice before setting up a trust, you can face major tax implications, such as facing capital gains tax and inheritance tax.

There are many different types of trust which you can create. Therefore, if you’re looking to create a trust, it’s always best to first discuss what terms and conditions of your trust with a trust solicitor. However, to get an idea of the different types of trusts you can create, our trust solicitors have listed some of the most common.

• Qualified terminable interest property trust. This trust allows you to give assets to specific beneficiaries at separate times. For example, you may decide for your spouse to receive a lifelong income from the trust, and when your spouse passes away, your children will inherit the remaining amount.
• Generation-skipping trust. This form of trust allows a person to transfer assets tax-free to beneficiaries at least two generations younger, usually their grandchildren.
• Charitable trust. This form of trust is beneficial to charities, and it can be a method of reducing or avoiding estate and gift taxes. For example, a charitable remainder trust will provide an income to your beneficiaries (your spouse or children, for example) for a specific amount of time and then donates the remaining assets to charity.

If you have any questions regarding a trust you’re looking to create, please get in contact with one of our solicitors directly on 0203 007 5500.

Because trusts are always bespoke and can be highly complex, it’s beneficial first to arrange an initial consultation to discuss.

In this initial consultation, our solicitor’s guarantee:

• Unlimited time to discuss your trust and to answer any questions you may have
• An overview of the suitable trust for you and how to go about creating them
• An upfront cost and time estimate for our solicitors to create your trust
• Straightforward inheritance tax advice

For more information, please don’t hesitate to contact our trust solicitors directly on 0203 007 5500.