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Trusts

What is a Trust Deed?

A Trust Deed is a legal arrangement that places property under the control of appointed trustees, to administer to the benefit of those named in the deed or will. A trust can be a great way of managing and protecting your assets during your lifetime and beyond and can also reduce the amount of inheritance tax payable on your death.

Trusts are separate legal entities and are taxed independently for income tax, capital gains tax and inheritance tax purposes, so they are an effective means of separating your estate to avoid tax generally.

There are lots of personal reasons for speaking to us about a trust, but the main reasons are:

  • To make provision for your family, now and in the future.
  • To assist in effective tax planning, especially in reducing the amount of inheritance tax payable on death.
  • To make a gift to a loved one, but with conditions (for example, you can set guidelines on how your trustees should administer the trust, and at what age and in what circumstances the beneficiaries can have access to their share).
  • To protect assets that for some reason, you think it inappropriate that a beneficiary has full and free access to.

How do I create a trust?

The actual creation of a trust is very simple, but it is important that it is carried out in a legally acceptable way in order to avoid complications in the future.

Will Trusts

A Will Trust allows married couples to arrange in their wills that, on the death of the first spouse, the trustees can advance or lend up to the £325,000 nil-rate portion to the surviving spouse. This enables the surviving spouse to inherit all the deceased spouse’s assets but have access to the assets in the trust via the trustees.

On the second death any loan must be repaid to the trust and any outstanding loan is normally deductible from the value of the estate before IHT is calculated. The remaining assets then pass to the children net of the loan, giving a tax saving of up to £100,000, assuming the loan has been spent.

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