What is a trust?
A trust is an arrangement, defined by law, where someone or a group of people are made responsible for assets for the benefit of another group of people. The people assigned to administor the trust are known as trustees and those benefiting, the beneficiaries. The person who sets up the trust is known as the settlor. The assets are then held in the trust and will be released at the desired time. For example this might be on a desired date, or event such as someone turning 18 and becoming an adult.
Why should I set up a trust?
There are a number of benefits to setting up trusts for your loved ones, these include:
- Avoiding inheritance tax
- Protecting you family's assets against care fees
- Making sure you a beneficiary is looked after
What type of trust should I set up?
Trusts can be complicated as there are two broad types of trust that can be set up which have different advantages. These are revocable and irrevocable trusts.
Revocable trusts enable the assets to be given back to the original owner, and have little tax benefits. However, they can be used for a number of short term gains.
On the other hand irrevocable trusts permanently take the assets out of your assets which can have a number of advantages for saving on inheritance tax, as well as providing security for the beneficiary. However, once the asset has been placed in an irrevocable trust, it cannot be reversed so you must be sure of your decision to do so and know that you will not need the asset yourself one day.
For free, confidential advice from our expert team of advisors, contact Inheritance Solutions UK today and help us plan and secure your future for your family.