Trusts

What is a trust?

A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries.

What is a trust used for?

A trust is a way of managing assets (money, investments, land or buildings) for people. There are different types of trusts and they are taxed differently.

Who is involved in a Trust?

  • The ‘settlor’ – the person who puts assets into a trust
  • The ‘trustee’ – the person who manages the trust
  • The ‘beneficiary’ – the person who benefits from the trust

Why would a trust be beneficial?

Trusts are set up for a number of reasons, including but not limited to:

  • To control and protect family assets
  • When someone’s too young to handle their affairs
  • When someone cannot handle their affairs because they’re incapacitated
  • To pass on assets while you’re still alive
  • To pass on assets when you die (a ‘will trust’)

Types of trust

The main types of trust are:

  • bare trusts – Bare trusts are often used to pass assets to young people – the trustees look after them until the beneficiary is old enough.
  • interest in possession trusts- These are trusts where the trustee must pass on all trust income to the beneficiary as it arises (less any expenses).
  • discretionary trusts- These are where the trustees can make certain decisions about how to use the trust income, and sometimes the capital.
  • accumulation trusts- This is where the trustees can accumulate income within the trust and add it to the trust’s capital. They may also be able to pay income out, as with discretionary trusts.
  • mixed trusts- These are a combination of more than one type of trust. The different parts of the trust are treated according to the tax rules that apply to each part.
  • settlor-interested trusts – These are where the settlor or their spouse or civil partner benefits from the trust

non-resident trusts- This is a trust where the trustees are not resident in the UK for tax purposes.

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Here’s the legal bit..

Please note that the information on this website is referenced from and accredited to the UK Government website and may change in accordance to updates of relevant laws and acts associated with the topics included.

The information provided on this website is only to be used as reference and an example.

We do our best to provide correct and up to date information and advice to our valued client and visitors however it is your sole responsibility to confirm these details with the relevant parties and do your own research prior to any engagement.

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