Why put assets into trust?

Many of our clients ask why it would be beneficial for them to place assets in the form of money or property into a trust for their children or other loved ones.

Childrens-Trust-attorney

In most cases that we handle, assets are put into trust to benefit children who have not yet reached an age dictated by our client. The trust is set up and managed by one or more trustees, who then have the legal obligation of handling the funds in the trust until such time as they are able to be made available to the beneficiaries.

There are several different types of trust to cater for specific circumstances and financial objectives:

Discretionary trust - a discretionary trust gives trustees absolute control over how the funds should be managed.

Interest in possession trust – an interest in possession trust can give the beneficiary an immediate income from the invested assets, although they will not have immediate access to those actual assets and may be required to pay income tax as usual.

Bare trust – the simplest trust to set up, a bare trust states that the beneficiary will receive specific assets when they reach a certain age.

Trust for a vulnerable person – of course, trusts are not only set up for children. Vulnerable adults may also benefit and this type of trust is perfect for them, particularly as the rate of income tax may be reduced.

Non-resident trust – on occasion, we meet with the added complication that all named trustees live outside the UK. In this instance, a non-resident trust may mean that income tax can be reduced or eliminated altogether.

In addition to providing additional funds for your loved ones, setting up a trust means that the amount you invest in the trust will subsequently be removed from the value of your overall estate, which often helps to reduce the amount of Inheritance Tax which may fall due in the event of your death.

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