Trusts - Sutherland & Co Law
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Trusts

Are you thinking of setting up a Trust?  If so then please see below for some information which you may find helpful

A Trust may be created during someone’s lifetime, included in a Will, or could arise as an implied trust, through the operation of law or even as a result of the Courts deciding that a person’s behaviour towards their property or another person’s property could form a trust.  This Guide is based on Trusts created during someone’s lifetime.

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There are various types of Trusts.  The most common forms of Trusts created during someone’s lifetime are Interest in Possession Trusts, Discretionary Trusts and Bare Trusts.  There are however more specialised Trusts, for example, disabled persons, bereaved minor trusts, personal injury trusts and protective trusts.

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Factors affecting your choice of Trusts will be taxation; both your current position and the future taxation of the Trust and your ability and willingness to dispose of your assets during your lifetime.  Unfortunately, there is little to gain now from you retaining an interest in a Trust, so you must be sure that you are in a position to manage financially in the future without further access and use of the assets that will form the Trust.  Creating a Trust is to make an irrevocable gift.  

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Some people wish to simply transfer their property as an outright gift to their loved ones rather than placing the property into Trust. Contained within the guide is the “pros” and “cons” to an outright gift of your property to say, your children. 

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Reasons why a person may require a Trust

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You and your family may have worked for generations to create the assets which you have today and you want those assets to be protected from any unfortunate future decisions which could be made by your loved ones.   Your loved ones could be influenced by their partners; they may not be able to handle dealing with aspects such as cash and property.  A Trust can protect the beneficiaries.  Whilst Trusts cannot prevent beneficiaries making poor life choices or take away the risk of failing performance of investments in difficult conditions, the Trustees can act as a guide to beneficiaries and can act as a authoritarian in requests from beneficiaries for money or resources which the Trustees believe would not be in the best interests of the beneficiaries therefore protecting the funds within the Trust – effectively the Trustees can protect the chosen beneficiaries from themselves. 

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A Trust provides the ability to transfer assets out of personal ownership but you may effectively still be able to dictate their use (depending on the terms of the Trust).

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Depending on the nature of the Trust, the Trust is often a way of helping people minimise Inheritance Tax (IHT) payable on their estate.

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A Trust could also avoid the need for your Executors/Personal Representative applying for a Grant of Probate upon your death (depending on the value of your remaining estate).  Upon your death, your assets pass directly to your Executors/Personal Representatives.  The process of applying for a Grant of Probate is quite a lengthy procedure.  During this time assets cannot be changed, sold, dealt with or managed until a Grant of Probate is obtained.  This could temporarily leave the beneficiaries of your Estate without access to financial support. 

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Under the Trust the Trustees own the legal title to the assets in the trust fund and therefore are able to continue managing them following your death. This essentially means that the Trust’s beneficiaries continue to have access to the support which was enjoyed before your death.

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If you would like to discuss your Will, Trust or a Probate matter further or you require any assistance then we are always here to help and assist so please do not hesitate to contact us on 01302 279179 or click here to request a call/email back. 

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