A Guide to Setting Up Trusts to Protect Your Assets

A Guide to Setting Up Trusts to Protect Your Assets

Whilst most people are familiar with the process of writing wills so that their wishes can be expressed in the event of death, Trusts remain relatively uncommon even though they present many benefits and can be a great way to protect your assets and estate.

There are many reasons why it might be a good idea to consider the formation of a Trust, even if you feel as if the assets you are in possession of are minimal or if you believe that your will already fully represents your wishes.

What is A Trust?

A Trust is considered to be a way of actively managing a range of assets including money, property, land or other valuable assets. It is important to remember that there are several different types of Trust, all of which are taxed differently, making some more suitable than others depending on your requirements. Unlike a will which must proceed through probate after death, a Trust can be called into action immediately.

The two most common types of Trust include;

  • The Discretionary Trust – A common way to minimise inheritance tax by maximising the inheritance tax allowances of unmarried couples for the benefit of their intended beneficiaries.
  • The Lifetime Trust – A common way to transfer the ownership of assets to other entities whilst still maintaining control over them as well as the benefits they provide.

The Parties Involved

Trusts usually involve three parties who hold a specific title under the Trust. It is also possible for one individual to be named under several of these titles if required.

  • The settler is the individual who places assets into a Trust for the purpose of protection.
  • The trustee is the individual who manages the trust and the assets contained within it.
  • The beneficiary is the individual who stands to benefit from any assets contained within the Trust.

A Lifetime Trust for example would usually see one individual named as all three parties if they were attempting to minimise their tax liability whilst receiving an income or dividend payments.

Common Reasons for Setting Up a Trust

As mentioned, there are several other reasons why someone might wish to establish a Trust which include:

  • The control and protection of important family assets which need to remain within the family.
  • When a young member of the family has inherited a large sum of money but is incapable of handling their affairs.
  • When someone has been incapacitated and can no longer handle their affairs.
  • The passing on off assets to another party whilst still alive.
  • When someone is considered to be vulnerable due to disability or when someone under the age of 18 has experienced the death of a parent.

Establish Your Trust

Heritage Wills are well versed is establishing both Discretionary and Lifetime Trusts. We have the knowledge and expertise to advise further on these matters as well as to assist you in establishing powers of attorney if required. For further information, speak to a member of our team on 01603 894500 who will be to advise further on the different options available.