Commonly asked questions about Trusts
What is a Trust?
A Trust is a legal arrangement (also known as a "Settlement") that enables you to give away assets but restrict or direct how and when they are used. Trusts can be used to make gifts in your lifetime and they can also be set up under the terms of a Will.Who are the three main participants?
- The settlor:
this is the person who created the trust and normally gives away the assets that are placed in the trust - The beneficiary:
this is the person who is to receive the assets or benefit from them. A beneficiary can also be a trustee and/or the settlor. - The trustee:
this is the person(s) who looks after the assets ensuring they are invested/used in accordance with the rules of the trust and general trust laws.
- The settlor:
What can a trust do?
A trust can be a useful device in a wide range of circumstances. For example.
- Giving to children. You want to make a gift to a child to be available to him or her when he/she is older.
- Maintaining control: You might not wish to give assets to someone who is not good at handling money, for example, someone with a careless financial record or a person who lacks mental capacity.
- Giving to a group: You wish to give to a group of people that might not yet be complete e.g. grandchildren (some not yet born).
- Separating income from capital: Useful when you wish to give assets to someone at some future time but want someone else to have the use of, or income from, the assets in the meantime.
- Giving on special occasions: You may want to make a gift only on the occasion of some possible but indeterminate event such as a marriage or birth.
- Maintaining confidentiality: You may want to arrange now to make a gift at sometime in the future but would prefer the beneficiary to be unaware of the gift at present.
- Tax efficiency: Sometimes a gift into trust can save tax or avoid tax problems which you would incur if making an outright gift. Trusts can be an excellent way to save £1,000s in Inheritance Tax.
How exactly do Trusts save Inheritance Tax?
There are a number of effective ways to use trusts to save Inheritance Tax. These can be quite complex.
To make it clear and understandable, Xpress Legal Services offer a free one hour consultation in your home to explain the pros and cons of how each method works, how much each costs and how much IHT each one saves.
Phone Mike Costello on 020 8644 5050 and arrange an appointment in your home at a time to suit you.
