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trusts
What is a trust?
A trust is an obligation that binds a person, known as a trustee, to look after property and/or assets in a given manner for the benefit of the beneficiaries.
What does a trustee do?
The trustee is ultimately responsible for the administration of the trust property or assets, and as such is responsible to the beneficiaries. Our helpsheet for trustees sets these out in more detail.
How is a trust created?
A private trust is most commonly created by a deed, whereby one person (the settlor) places property into the possession of their trustees for the benefit of their intended beneficiaries. There are several types of trust, of which the main varieties are outlined briefly below. For a more detailed critique please read our article concerning the recent tax law changes to trusts.
Discretionary trusts
Under such trusts no one beneficiary is entitled to an absolute interest in the capital or income of the trust. Instead the trustees have discretion as to which beneficiaries may receive benefit. It is usual that in the first 21 years of such trusts the trustees can accumulate the income and consolidate it with the trust capital, having no obligation to distribute it. However, after the expiry of this period the trustees must distribute the annual income to such beneficiaries as they decide.
Interest In possession trusts
These trusts provide for a specified beneficiary or beneficiaries to benefit and use the trust property and assets for a defined period, usually their life. The benefit conferred can be financial in terms of income, or a right to enjoy certain material property held within the trust. Upon the cessation of a life interest, the trust fund may pass into another life interest, or could pass as an absolute gift dependant upon the terms of the trust deed.
Children’s trusts
These were always referred to as accumulation and maintenance settlements, however following the Finance Act 2006 this has considerably changed. They were historically created to provide for the education of children and grandchildren, with the balance of funds passing to them when they reached a defined age. Such trusts are now limited as to be created by the will of a deceased parent only, and most existing trusts of this type now require some form of amendment to avoid penal inheritance tax charges.
Our service
mfg Solicitors can assist you in setting up new trusts, or in managing existing ones. Our service is designed to aid you in meeting all of your responsibilities, and ensure effective management of the trust. Within the firm we have qualified professionals dealing in tax and accountancy, as well as the legal advice you would expect from a firm of solicitors. This is why we can offer such a diverse and broad service.
The New Inheritance Tax Rules for Trusts
For more information speak to Steve Holden on 0845 55 55 321 or
email: steve.holden@mfgsolicitors.com
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| Meet the Team | Paul Rhodes Alan Neal Valerie Robinson |
