Trusts

Trusts are a way of managing assets (for example investments, land, and buildings) and there are different types of Trust which are taxed differently.

A trust can be set up for a number of reasons including:

1. To control and protect family assets
2. When someone’s too young to handle their affairs
3. When someone cannot handle their affairs because they are incapacitated
4. To pass on assets whilst you are alive
5. To pass on assets when you die (a ‘Will Trust’) under the rules of inheritance if someone dies without a will

The settlor is the person who puts assets into a trust and decides how it will be used – this will be set out in a document called a ‘Trust Deed’. The settlor will also agree on the provisions of the Trust Deed, appoint the trustees, and specify the beneficiaries of the trust .

The trustee is the legal owner of the assets held in a trust and their role is to deal with the assets according to the settlors’ wishes as set out in the ‘Trust Deed’ or their will. They will also manage the trust on a day to day basis, decide how to invest or use the Trust’s assets and pay any tax due.

The beneficiary is the person who benefits from the Trust. There can be more than one beneficiary, like a whole family or a group of people. They may benefit from the income of the trust only, or the capital only when reaching a certain age, or both the income and capital of the trust.

1. The person you care for may wish to consider setting up a Trust, particularly in situations where they wish to pass on money to a child or young person under the age of 18. A Trust can also be set up for disabled people, including disabled children. In both of these circumstances, this is referred to as a ‘Trust for Vulnerable Beneficiaries’ and can get special tax treatment.
2. There are different types of Trust and each type is taxed differently. Due to the complexity of Trusts it is advisable to contact a solicitor or tax advisor for help. They can advise you whether a Trust is appropriate and, if so, what type of Trust should be used as well as the tax implications. They can also talk to HM Revenue and Customs (HMRC) on someone’s behalf subject to being given permission
3. More detailed information about trusts and sources of support. Help is also available from the Society of Trust and Estate Practitioners.