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One of the best ways to help keep the taxman’s hands off your money is to put your assets in trust. At Mortgage Masters, we can help in setting up trusts.
Trusts are a very useful, if sometimes complex, legal way of giving your money, property or shares, to others, whilst ensuring that you, or others that you trust (hence the name), retain some control over what happens to those assets.
Trusts are frequently used to avoid paying unnecessary Inheritance Tax, or for helping to solve long-term family or domestic situations, such as giving money to children or grandchildren, but at an age when they can be considered to be responsible.
Our advisors have helped many people set up Trusts and are highly skilled in getting these arranged. Just call us at our Oxford office on 01865 744299 or complete our simple Trust Form.
You can create a trust while you are alive, usually by a formal trust deed. This is usually referred to as a "settlement", or you can create a trust on your death in your Will (a "Will Trust"). Whichever method is used the document will set out what is being given away, who is going to look after it (the "trustees" - who can include yourself in lifetime trusts), who is to benefit from the gift (the "beneficiaries"), and any rules that the trustees must follow when looking after the assets - for example what they can and cannot invest in; how the capital and income can be spent; and how long the trust is to go on for.
When talking about trusts, you will come across the following terms:
Settlor – the person setting up the trust.
Trustees – the people tasked with looking after the trust and paying out its assets.
Beneficiaries – the people who benefit from the assets held in trust.
There are now three main types of trusts. Any number of different types of investments can be held in a trust so you may want to seek expert financial advice to decide which is best for you.
Bare (Absolute) Trusts
With a bare trust you name the beneficiaries at outset and these can’t be changed. The assets, both income and capital, are immediately owned and can be taken by the beneficiary at age 18 (16 in Scotland).
Interest in possession Trusts
With this type of trust, the beneficiaries have a right to all the income from the trust, but not necessarily the capital. Sometimes, a different beneficiary will get the capital – say on the death of the income beneficiary. They’re often set up under the terms of a will to allow a spouse to benefit from the income during their lifetime but with the capital being owned by their children. The capital is distributed on the remaining parent’s death
Discretionary Trusts
Here the trustees decide what happens to the income throughout the lifetime of the trust and how it is paid out. There is usually a wide range of beneficiaries, but no specific beneficiary has the right to income from the trust.
