Trust and Trust Administration

Why Set Up a Trust?

There are a wealth of benefits to setting up a trust. They may be created to protect a vulnerable person, to provide a mechanism for benefiting the family or to benefit charitable causes. A trust can be a useful tool in cross generational tax planning and can provide the flexibility to take into account the personal circumstances of the beneficiaries at any given time.

As part of your succession planning, you may wish to gift money or assets into trust during your lifetime. You can also establish trusts under your Will which only take effect after your death.

Trusts can be set up for a variety of purposes, including for providing for minor beneficiaries, asset protect or for disabled beneficiaries so as to hold any funds needed to assist with day to day living in a tax-efficient environment. Some trusts split the entitlement to income from the entitlement to capital. Others leave the distributions of both capital and income to the trustees to decide.

A trust may be set up at any time during the lifetime of an individual by way of settlement or after their death under a will. Whatever your situation, we are able to offer you essential advice on the inheritance, capital gains, income and stamp duty tax implications of setting up and managing the trust.

You will need to decide which assets are to be included and they may need to be valued. At Coole Bevis LLP, we are able to sort an asset valuation for you. You will also need to determine who your beneficiaries are and whether you wish them to benefit in a particular way from the trust fund. Finally, you need to decide who you wish to appoint as Trustees to manage the trust.

A trust is created by way of legal deed and the type of trust and the powers the trustees have will need to be set out in the trust deed. If you have set up a flexible trust you will also need to set out your wishes in a letter of guidance to the trustees.

Managing Assets In A Trust

Our Private Client solicitors can help you to create and manage a trust. We are here to ensure your assets are safe and regulated by your appointed trustees. Administering a trust requires professional expertise, particularly as trusts are complex and technical. We will make sure that you understand the implications before setting up a trust. Please be ready to discuss annual accounts, tax returns, inheritance tax and a number of other topics essential for the creation of your trust.

We will assist with appointing trustees and often act as trustees ourselves if required. We will help to agree a suitable investment policy with your investment advisers and aid you in monitoring investment performance. The heart of our goal is to create trusts which will benefit you and future generations.

What Is A Trust?

A trust is a legal arrangement which is drawn up during your lifetime to manage money or assets which will in future benefit specific individuals or groups. There are many different types of trusts, but they will always involve three categories of people; the settlors or grantors who place assets into the trust, the trustees who manage the trust, and the beneficiaries who benefit from the trust. The trustees will control the disbursement of funds to beneficiaries during your lifetime or following of your death.

What Can I Put In A Trust?

What you can put into a trust differentiates between the type of trust you have and who your beneficiaries are. However, many people choose the following to hold within a trust:

• Property/Real Estate
• Bank Accounts/Cash
• Investments
• Business Interests
• Foreign Assets (depending on whether the jurisdiction permits trusts)

How Do I Set Up A Trust?

The process is quite straightforward and involves getting a document (a Trust Deed) prepared that sets out who you want to be the trustees, what will be in the trust, and what are to be the purposes and rules relating to the trust. However, it is important to fully understand the different types of trust and choose the one most appropriate to fulfil your intentions.

We can advise you on how best to set up the trust to achieve your goals and assist with drafting a Trust Deed.

When Might I Want To Set Up A Trust?

There are many reasons why you may consider a trust. We highlight just a few of them below:

1. A trust can hold investments, life policies, pension benefits and private company shares outside your so estate Inheritance Tax planning may help reduce future tax
2. Asset preservation as trusts can be used to protect and preserve the inheritance due to any children until they are old enough to take control of it themselves
3. Provide under your Will that if your spouse or partner marries again they will be entitled to the income from the estate but not to the capital, so the capital will ultimately pass on to your own family
4. Protect a vulnerable individual, for example who lacks mental capacity or is financially vulnerable due to a difficult marriage or insecure income potential
5. Avoid splitting ownership of a business if there are succession problems with the next generation(s)
6. Use a charitable trust to benefit a good cause, including tax exemptions where relevant
7. Take advantage of non-UK resident situations to reduce taxation

Declaration of Trust

A declaration of trust is a special trust of land most commonly used where two or more people purchase a house or flat, particularly in unequal shares. The declaration of trust will record each person’s contribution and hence the proportions of the property they own; this ensures that when the property is sold each homeowner gets a fair portion of what they put into the property

If you would like to discuss creating a Declaration of Trust for a commercial property, please contact our Commercial Property department. For all other queries, please contact our Private Client team.

What are the duties of a Trustee?

If you are a trustee, it is your duty to maintain the trust and supervise transactions. If you are a non-professional trustee, you may want to hire a solicitor to help you administer trust business. The duties of a trustee involve taking and making payments/investments, keeping records of accounts, managing tax affairs and attending meetings whilst complying with various trust laws. Trustees are also responsible for ensuring that the trust is managed properly in the interests of the beneficiaries and this can be difficult when there are different categories of beneficiaries.

Our solicitors can help you manage your trust effectively. Whether you would like one of our team to act as a trustee, or assist if you are a trustee, they will be practical and considerate – happy to offer a solution when it is needed.