What is a Trust?
A trust is a legal arrangement where one or more ‘trustees’ are made legally responsible for holding assets - such as land, money, buildings, shares - for the benefit of one or more beneficiaries.
The trustees are responsible for managing the trust and carrying out the wishes of the person who has put the assets into trust (the ‘settlor’). The settlor‘s wishes for the trust are usually written in their Will or set out in a legal document called ‘the trust deed’.
The purpose of a trust
Trusts may be set up for a number of reasons, for example:
- To control and protect family assets.
- To safeguard assets given to someone who may lack the capacity to handle their affairs, such as a young person or someone with a mental or physical incapacity.
- To pass on money or property while you are still alive.
- To pass on money or assets on death under the terms of your Will.
- Under the rules of inheritance that apply when someone dies without leaving a valid Will (England and Wales only).
Different types of trust
Protective Property Trust
A Protective Property Trust ensures that the surviving co-owner of your property, such as a spouse, can continue to live in your home for the remainder of their life after you pass away, whilst ensuring that your chosen beneficiaries ultimately inherit your share.
Flexible Interest Trust
A Flexible Interest Trust is used to protect and control how cash assets or investments are inherited, allowing the trustee to benefit from dividends or interest whilst ensuring that the capital value is ultimately inherited by the chosen beneficiary.
A Discretionary Trust can be used to assist a vulnerable beneficiary in managing their inheritance. Trustees can be given the authority to control access to funds or assets to protect the beneficiary's interests and ensure that your wishes are respected.