Specialist Trust Lawyers

With a bare trust you can name a specific beneficiary or beneficiaries which lets you ensure that a loved one is financially supported now and in the future.

With a discretionary trust you can provide for a class of beneficiaries such as your grandchildren and subsequent generations of your family. This means children who aren’t even born yet can be financially provided for. Trustees are bound to follow the instructions left in the trust deed and act in the best interests of the beneficiary, so your loved ones are protected.

Because a trust sits outside your estate for tax purposes, it won’t be included for inheritance tax when you die. For estates that exceed £325,000, which is the nil rate band for inheritance tax, the effective use of trusts can minimise your tax liability. However, it’s important to bear in mind that trusts are still subject to taxation, including capital gains tax and income tax.

Depending on the trust used, there may be an immediate charge to inheritance tax for the value of assets over the nil rate band. That’s why it’s essential to get professional inheritance tax planning advice before you set up a trust.

If your family has significant wealth and you want to avoid the wrong people getting their hands on it, a trust can safeguard assets from creditors in bankruptcy or financial claims in divorce. In addition, a trust gives you the reassurance that you can retain control of assets earmarked for beneficiaries who may be unreliable with money.

Any assets in trust may also be out of reach of a local authority care fees assessment, however you need to be careful if that’s your goal because there’s a risk that will be seen as a deliberate deprivation of assets and you might be assessed as if you do still own the asset.

A bare trust is commonly used to hold assets on behalf of younger beneficiaries or those who don’t have the mental capacity to manage them. The asset is held in the trust for the benefit of a specifically named individual or individuals. The trust fund belongs to them, to be passed on when it is appropriate to do so.

With a discretionary trust, you can nominate a class of potential beneficiaries. For example, grandchildren and their descendants. This type of trust is more flexible because it gives the trustees the power to decide when to give the income or assets to the beneficiaries. It also gives the settlor more control over what happens to family assets long-term.

It might seem simple to just give your loved ones their inheritance while you’re still alive, but this can come with inheritance tax implications. Transferring the asset into a trust can be a more tax-efficient way of passing it on. Bear in mind, once the asset is transferred into a trust, you can’t get it back so you need to be sure before you make that decision.

We can provide ongoing advice to trustees regarding their role in managing trust assets and distributing income or capital to beneficiaries. If you need to make any changes, we can assist with changing trustees, adding new beneficiaries where the trust permits, and updating letters of wishes helping you keep your plans up to date.

Considering a trust when you are writing a will can help mitigate inheritance tax. Not only for you but also for your surviving spouse. For example, rather than passing assets inheritance tax-free to your husband or wife, you can transfer property, money, or financial assets into a trust. Your spouse can then use what nil rate band is left and combine it with theirs to maximise inheritance tax savings on their estate.

This type of trust is useful for providing a home or income for a surviving spouse after the first person dies while ensuring the trust assets eventually pass to your children or grandchildren. This type of trust in a will can ensure that the family home will not be included in means-based care assessments from the local authority should the surviving spouse need long-term care in a nursing or residential home.

Our expert Wills, Trusts, and Estates team can advise you on the trust options available and their tax implications so you can make the right choice for you and your family.