Reasons to Have a Trust

Why have a trust; trusts are set up for a number of reasons, including:

• to control and protect family assets
• when someone’s too young to handle their affairs
• when someone can’t handle their affairs because they’re incapacitated
• to pass on assets while you’re still alive
• to pass on assets when you die (a ‘will trust’)
• under the rules of inheritance if someone dies without a will (in England and Wales)

1. Overview

A trust is a way of managing assets (money, investments, land or buildings) for people. There are different types of trusts and they are taxed differently. Trusts involve: • the ‘settlor’ - the person who puts assets into a trust • the ‘trustee’ - the person who manages the trust • the ‘beneficiary’ - the person who benefits from the trust

2. What the settlor does

The settlor decides how the assets in a trust should be used - this is usually set out in a document called the ‘trust deed’. Sometimes the settlor can also benefit from the assets in a trust - this is called a ‘settlor-interested’ trust and has special tax rules. Please ask for further details.

3. What trustees do

The trustees are the legal owners of the assets held in a trust. Their role is to: • deal with the assets according the settlor’s wishes, as set out in the trust deed or their will • manage the trust on a day-to-day basis and pay any tax due • decide how to invest or use the trust’s assets If the trustees change, the trust can still continue, but there always has to be at least 1 trustee.

4. Beneficiaries

There might be more than 1 beneficiary, like a whole family or defined group of people. They may benefit from: • the income of a trust only - eg from renting out a house held in a trust • the capital only - eg getting shares held in a trust when they reach a certain age • both the income and capital of the trust