It is important to consider the legal, practical and tax implications before creating a trust as there are many types of trust to consider. We will discuss with you your objectives and advise you on the most suitable trust for your circumstances.
A bare trust enables one or more trustees to hold a trust fund for the benefit of someone else (the beneficiary). If the beneficiary is an adult of sound mind they can request for the trust assets to be transferred to them at any time.
A charitable trust can be set up to benefit the public rather than a specific individual. It can be created during your lifetime or after your death in a will.
A discretionary trust allows the trustees to decide who from a group of beneficiaries receives what and when. No-one is entitled to anything from the trust without the trustees agreement. If you are considering setting up a discretionary trust you may want to consider appointing an independent professional who is not influenced by family issues and who will comply with your objectives for the trust.
An immediate post death interest trust is created by the will of a person who has died. An example of this may be where a husband dies leaving a will that provides for his wife to receive income from his estate during her lifetime and after her death for his estate to pass to their children.
A life interest trust entitles a beneficiary to the income of the trust for a period of time (or for life). When that interest ends, the trust fund passes to identified beneficiaries.
Offshore trusts are used to reduce tax by setting up a standard trusts under the laws of an offshore jurisdiction and are most beneficial to non UK domiciled people before they move to the UK and for asset protection usually where there is a “foreign element”.
A personal injury trust allows the damages received as a result of a personal injury to be paid into the trust. The damages (in the trust) are then not taken into account in the means testing process and any entitlement to income support should continue.
A pilot trust can be used for tax mitigation. It allows assets (usually money) to be received in the future reducing the IHT impact on the beneficiary’s death.
It is important to consider all of the legal, practical and tax implications before creating a trust. At Hart Brown our experienced team will guide you through the implications and help you set up a trust that best suits your objectives. We can also act as trustees of the trust.
To speak to a specialist lawyer who can advise on pilot trusts or any other type of trust call, email or request a call back.