A trust is a legal document that protects property or assets ready for those you are leaving them to (your beneficiaries). Trusts usually release funds to your beneficiaries at an agreed milestone age, such as 18 or 21. So you could stipulate that a younger relative receives a certain piece of jewellery or a specified amount of money on their 18th birthday, for example.
Trusts can protect your assets from estate taxes and probate. Unlike a will, which requires proof of probate before the assets within it can be released to your executor, trusts can automatically release assets and funds to your beneficiaries at pre-agreed times and dates.
There are different types of trusts to achieve different goals:
Bare trusts protect assets for younger relatives. Assets are automatically released to beneficiaries at the age of 16 (Scotland) or 18 (England and Wales). Your family knows exactly what should be done with your valued possessions.
Interest in possession trusts apply when another relative (such as a husband or wife) protects assets for a period of time before they are passed on to your beneficiaries (son or daughter under 18 years of age).
Discretionary trusts allow the person creating the trust (settlor) to stipulate certain rules or conditions regarding the inherited assets. They can declare whether income or capital is paid, which beneficiaries receive the assets and how often payments are made to beneficiaries.
Your loved ones pay the correct amount of Inheritance Tax.
Accumulation trusts allow the settlor to add accumulated income to the trust’s capital but still pay out income from the trust.
Mixed trusts combine the best features of several different trusts to make the most of the tax savings that apply to each type of trust.
Settlor-interested trusts are any of the above trusts that benefit the settlor rather than a beneficiary. Settlors can create and pay into these trusts but still receive payments from them.
Non-resident trusts are set up when the chosen trustee (the person who manages the trust) is not resident in the UK.
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Solicitors for the Elderly is an independent organisation of legal professionals who specialise in providing legal advice to elderly and vulnerable clients.
The Notaries Society represents the 900 or so Notaries Public currently practising in England and Wales.