Trusts - Wills, Tax & Estate Planning

A Trust may be created during a person’s lifetime, on death by a Will or under the Intestacy Rules where a person does not leave a Will.  The creation of a Trust is the alternative to giving property to someone outright.  A Trust comes into being when assets are transferred by an individual ("the Settlor") to Trustees who hold these assets for the benefit of one or more persons who will receive income and/or capital from the Trust – the Beneficiaries.

What are the different types of Trust?

There are four main types of Trust:

• Discretionary Trust – where no-one has the right to receive the income or capital of the Trust but the Trustees are free to distribute the Trust fund as they wish between a wide class of Beneficiary.
• Interest-in-Possession Trust – where someone (the "life-tenant") has a right to receive the income of the Trust.  The capital of the Trust can be left to different Beneficiaries.
• Bare Trust – where the Beneficiary is absolutely entitled to both the income and capital of the Trust fund.
• Charitable Trust – where the Beneficiaries are charities.  The Trust can only be used for charitable objects and can last forever.

The information detailed here should only be regarded as a brief summary of the various types of Trust.  The statutory and drafting requirements to qualify for the various tax benefits are complex and it is vital to seek the advice of a professional before creating any form of Trust.  The on-going administration of the Trust may also have similar complexities.  We have an experienced team who are able to:

• Advise on the use and taxation of Trusts in connection with your personal circumstances.
• Draft Trust Deeds and associated documents, for example Trustees Resolutions, Deeds of Appointment and Retirement of Trustees, documents dealing with the distribution of Trust property and documents dealing with the modification of the terms of the Trust.
• Administer the Trust, to include dealing with the preparation of all tax returns and Trust Accounts.
• Act as Trustees, where appropriate.

For further information, please contact our Wills, Tax & Estate Planning Team.