Simpler Trusts.

What is a Trust?

Protecting your assets during your lifetime and beyond.

A trust is a legal arrangement created by you normally through a Will or a Trust Deed. You choose people or professionals, who are then subject to certain duties, to protect the trust assets for the use and benefit of others. Choosing the right trustees is vital. We offer a complete range of Trusts including the following:

Protective Property Trust
Flexible Lifetime Interest Trust
Residuary Discretionary Trust
Disabled Person's Discretionary Trust
Nil Rate Band IOU Discretionary Trust
Right to Occupy Trust
Business Property Relief Protection Trust
Asset Protection Trust

Different Types of Trusts.

Here's a brief explanation of Trusts, relevant to Estate Planning and how each can be a powerful benefit.

Where a property is held jointly as Joint Tenants, it will pass outside of the deceased's estate and to the surviving tenant.

By changing the joint ownership of the home to Tenants in Common the deceased's share of the property now passes into their estate to be included in their Will.

The Will then directs that this share of the property is passed into a Protective Property Trust. This trust then ensures that the following will happen:

A Life Interest in the share of property is given to the surviving spouse or partner
The trust protects the assets from any third-party claim, which means;”.
The ultimate beneficiaries are guaranteed to benefit and receive their share

The ultimate beneficiaries are guaranteed to benefit and receive their share

Very simply a FLIT is similar to a Protective Property Trust but allows the life tenant access to the capital and not just income

Married couples often make use of a FLIT where they have an Inheritance Tax liability but do not want to give away assets prior to first death.

If the survivor’s estate is liable for IHT on their death, they could choose to gift assets, including those held by the trust, to reduce the value of the estate.

Such gifts would be potentially exempt transfers and subject to the seven year rule.

Often used by those wishing to exercise more specific control of their estate

This may be due to concerns over their chosen beneficiaries' personal circumstances

If the survivor’s estate is liable for IHT on their death, they could choose to gift assets, including those held by the trust, to reduce the value of the estate.

Possible divorce
Possible bankruptcy
Alcohol, drug or gambling addiction
Ill health or incapacity
Loss of necessary benefits
Potential Inheritance Tax liability
Just want to ‘control from the grave’

Protects the ongoing receipt of means tested benefits

Trustees look after the interests of those who are incapable of managing own affairs

Although there can be another beneficiary named in the trust, in order for the trust to qualify for beneficial Inheritance Tax treatment, all payments must be made to the disabled person, except for small allowable amounts.

Any income received within the Trust benefits from a reduced rate of income tax, rather than the usual higher rate applied to trusts.

The Trust is written to receive shares / qualifying assets of a business

The beneficiary of the Trust can sell the assets within the Trust essentially 'preserving' the Business Property Relief

This Will Trust should be considered where the Testator has any kind of business assets

Should the business no longer qualify for BPR, or indeed has long since been sold or liquidated, then the Trust would simply never come into effect

For more detailed information about Trusts view or download our dedicated Trusts Brochure.

The Role of Trustee.

Professional Trustee Services

A Trustee owes fiduciary duties to the beneficiaries. These duties are typically set out in the Trust Deed or provided by Statute. The main duties are; Duty to the Terms, Duty to Loyalty, Duty to Manage the Trust Effectively, Duty to Act Personally, Duty to Consider the Beneficiaries, and Duty to Account. We recommend appointing a Professional Trustee who will take on the liability and responsibility for complying with the complex Trust legislation. Our sister company, Fidelis Legal Services Limited are Professional Trustees and manage over £1.1 billion in Trust assets for our clients.

In choosing Fidelis Legal Services there is the additional reassurance that it is not a single individual acting as Trustee, but a limited company with the responsibilities and protections this provides. This also means that there is always someone available to act as the Trustee, unlike if an individual is appointed.

What a Trust can and cannot do.

What does a Trust do?

A Trust protects your property and other assets from side-ways disinheritance.
A Trust allows you to set restrictions on when your beneficiaries inherit.
A Trust allows you to leave instructions on how your estate is to be managed by your chosen Trustees after you pass away.
A Trust can include restrictions to ensure that a vulnerable beneficiary is protected. This can include:
- Ensuring means tested benefits are not lost through a beneficiary receiving a large lump sum.
- Delaying an inheritance until a beneficiary is free from an addiction.
- Protecting estate funds from a beneficiary’s abusive, controlling or unsuitable partner.
- Delaying the inheritance to a beneficiary who is bankrupt until such a time that they are discharged.

What a Trust doesn’t do.

When planning for your Trust there are a couple of popular misconceptions to consider, alongside the many great benefits they provide.

The first misconception is that you can use a Trust to avoid paying for care home fees. Trying to avoid your property being part of a means tested assessment in this way is known as a Deliberate Deprivation of Assets and we do not advocate this practice, through Trusts or other means.

There is also a misconception that putting your assets in a Trust makes them immune from Inheritance Tax. This is not the case in a trust where you continue to benefit from the trust asset in any way. There may be ways to reduce your Inheritance Tax liability, and our advisors offer the most suitable options tailored to each clients’ requirements.