Trusts & Succession Planning
What is a Trust?
A trust is the formal transfer of assets (such as property, shares or cash) to a small number of people (usually two or three) or to a trust company with instructions that they hold the assets for the benefit of a number of named individuals or a specific group (known as beneficiaries).
The person giving the assets is usually known as the ‘settlor’ in the UK and the people appointed to look after the assets are called the ‘trustees’. The assets placed in the trust are collectively known as the ‘trust fund’.
The assets in the trust fund are not legally owned by the trust. This is because a trust, unlike a company, cannot own assets in its own name, and instead the Trustees are the legal owners of the assets. However, although the Trustees are the legal owners of the assets, they must put the interests of the beneficiaries above their own.
Trusts can take effect during the lifetime of the settlor or after his/her death by his/her Will.
You may already have had dealings with a trust without even realising. Most company pension schemes are structured as Trusts, as are many life insurance policies as payments are made at the Trustees’ discretion.
Some of the most common family situations where trusts are used (often pursuant to a will) are:
• to provide for a surviving husband or wife after death while protecting the future interests of any children. This can be particularly beneficial for families where there are children from previous marriages.
- To provide for a surviving husband or wife after death while protecting the future interests of any children. This can be particularly beneficial for families where there are children from previous marriages.
- To protect the inheritance of young children until they are old enough to manage funds themselves;
- To provide for vulnerable beneficiaries who are unlikely to be able to look after their own affairs;
- To help succession planning for a family business.
Trusts can be powerful tools in long term family succession planning for assets to pass down through generations and to protect against the dilution of family wealth or the breaking up of a family business due to divorces or second marriages.
Consulting with a qualified Solicitor is essential when creating a trust to ensure it aligns with your specific goals and meets legal requirements.
To find out how a Trust may benefit you, contact STEP qualified Solicitor Karen Yates at karen@yateslegal.co.uk or click here.
For more information about the Society of Trust & Estate Practitioners (STEP) click here:
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