Trusts are an arrangement whereby a person (trustee) holds property as its nominated owner for the good of one or more beneficiaries and can be used in many situations. For example, if you want to leave money to young children, then the money will need to be held in trust until they are old enough to receive it. Or you may require one beneficiary to have use of the property during their lifetime but on their death, it passes to another beneficiary.
Because people’s largest asset is usually their home, trusts are often formed to protect them. Because there is a great deal of misunderstanding about trusts and what they can do, you should consider the following carefully:
- What trusts can't do
- What trusts are capable of
- How to set them up correctly
- When to set them up
- What problems they solve
- What are the rules
Discretionary trusts are where the trustees can make certain decisions about how to use the trust income, and sometimes the capital. Trustees can decide what gets paid out, which beneficiary to make payments to, how often payments are made, and any conditions imposed on the beneficiaries.
These Trusts are often set up to put assets aside for a future need, like a grandchild who may need more financial help than other beneficiaries. They are also used when one of the beneficiaries is not capable or responsible enough to deal with their own finances.
Interest in possession trusts
A beneficiary who is entitled to the income of the trust for life is known as a 'life tenant' or as 'having a life interest'. A beneficiary who is entitled to the trust capital is known as the 'remainderman'.
The beneficiary who receives income often has no rights over the capital of such a trust; instead, the capital will normally pass to a different beneficiary or beneficiaries in the future. Depending on the terms of the trust, the trustees might have the power to pay capital to a beneficiary even though that beneficiary only has a right to receive income.
Our costs are:
- Basic Single Trust - £250.00
- Basic Mirror Trust - £300.00
Other advantages of trusts.
Further advantages of trusts include the fact that assets placed in trust do not need to go through the probate process. They can be accessed immediately, which can save a lot of time and money for beneficiaries.