Trust
A legal arrangement where assets are held by trustees for the benefit of beneficiaries. Used for tax planning, asset protection, and controlling inheritance.
A trust is a legal arrangement where one person (the settlor) transfers assets to be managed by trustees for the benefit of beneficiaries.
Key People in a Trust
- Settlor: Creates the trust and puts assets into it
- Trustees: Manage the trust and make decisions
- Beneficiaries: Those who benefit from the trust
Common Types of Trust
- Bare trust: Beneficiary has immediate right to assets
- Discretionary trust: Trustees decide who gets what and when
- Life interest trust: One person benefits for life, then assets pass to others
- Property protection trust: Protects your home from care fees
Why Use a Trust?
- Protect assets from care home fees
- Control when beneficiaries receive assets
- Provide for a vulnerable beneficiary
- Reduce inheritance tax (in some cases)
- Protect assets in second marriages
Common questions
How much does it cost to set up a trust?
Simple will trusts are included in will-writing costs. Lifetime trusts typically cost £500-1,500 to set up professionally.
Can I be a trustee of my own trust?
For lifetime trusts, yes - you're often one of the trustees. Will trusts take effect after death, so you can't be a trustee.
Do trusts avoid inheritance tax?
Some trusts can reduce IHT, but many don't, and some trigger immediate tax charges. Professional advice is essential.
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