What is a Trust?
Setting up a Trust is a flexible way of giving away assets without passing them absolutely to Beneficiaries, and multiple Trusts can provide even more flexibility.
The benefits of Trusts can include:
Privacy: Whereas a Will is a public document that anyone can request a copy of once it has been admitted to probate, Trusts are semi secret documents for the eyes of the Trustees alone. The Trust is a private document, and the contents of it will not become public. Who you have chosen to benefit from your Estate will therefore remain private.
Different Beneficiaries: You can name different Beneficiaries in different Trusts. This will ensure privacy and separation for all parties, as the Beneficiaries of a Trust will not be involved in the use of funds for any other if they are not parties to the settlement.
Autonomy & Management: You can appoint different Trustees to different Trusts if desired. This means that control and decision making powers can be in the hands of different people for different Trusts. Trustees must act unanimously, and this can become an issue where there are disputes between the Trustees and they no longer see eye to eye. Trusts can no longer operate effectively if the Trustees cannot agree on a course of action, and it may be that the funds cannot be utilised for the benefit of Beneficiaries as a result. Allowing different Trustees to act across a number of Trusts means that each Trust can be managed independently of others. This once again allows privacy and separation for the Trustees of each Trust.
Divorce: Where a Beneficiary of a Trust gets divorced, any benefits they have received from a Trust may be taken into account in a settlement. If the Beneficiary can benefit from a number of Trusts but to date has only received a benefit from one Trust, for example, it is likely that only the Trust they have received a benefit from so far is at risk of being included in any settlement. Any Trust or Trusts that a Beneficiary has not received a benefit from to date may not be included in a settlement, as they have not yet received anything from the Trust. This can be a way of better protecting the assets, as the increased separation reduces the risk of attack.
Costs: Where the Trustees of a Trust are concerned with one family or branch of the family as opposed to numerous members with different needs, the management of the Trust can be simpler, and therefore cheaper. A group of simple Trusts is much simpler to manage than a single Trust with many purposes, mixed assets, multiple Beneficiaries and more potential for conflict amongst them.
Declaration of Trust: This can be used for a variety of scenarios when The Land Registry Legal Title doesn’t reflect the true picture of property ownership. A Declaration of Trust is a legal document that would confirm the facts of the matter. Some common examples of when a Trust of Land can have real benefits are: to reflect a contribution to a property purchase. E.g. when a parent gives money to a child to assist with a property purchase, if joint property owners have contributed unequal amounts towards the property purchase, if someone improves a property and wants their contribution noted and secured on the property, or when dealing with rental properties is that of structuring the rental income splits for income tax efficiency.
Care Fee Mitigation: It is important to safeguard your home and the first step is to look at the way you currently own your home. The majority of people own their homes jointly, which means that on first death, the survivor would then own 100% of the full property value, leaving your home vulnerable to attack from Care. Simply changing the way you own your home to what is known as ‘Tenants in Common’, combined with the appropriate Trust planning, will effectively ensure that your property is fully protected should either of you enter Care.
If you’re interested in speaking to a certified Estate Planner about how using Trusts might benefit you, please get in touch.