Trusts: the basics
More people are considering establishing a trust, either in their lifetime by a trust deed, or in their Will. Here are some basic facts about trusts along with explanations of key terms.
What is a Trust?
A trust is a legal arrangement, whereby one or more people (“the settlor(s)”) transfer assets to others (“the trustees”) for the benefit of a third party (“the beneficiary”).
What is a Settlor?
The settlor is the person who has put the assets into trust. Assets can be added to the trust at any time and by more than one person. Each person who adds assets would be a settlor.
What is a Trustee?
Trustees are the legal owners of the assets held in the trust. There must be at least one trustee, and often it is necessary to have a minimum of two.
Trustees are in general responsible for:
- Managing the trust on a day-to-day basis
- Carrying out the settlor’s wishes
- Deal with the assets in accordance with the trust deed
- Pay any and all tax owing
- Decide how best to invest the assets
Their duties and responsibilities depend on the type of trust created by the settlor.
What is a Beneficiary?
Anyone who can or does benefit under the trust. There can be more than one beneficiary. Often classes of beneficiaries are defined in the trust deed; for example, my children, my nieces and nephews.
What assets can be in a Trust?
A trust can hold most assets and the assets are generally referred to as the “Trust Property”. They can include:
- Houses or buildings
The cash and investment part is usually called the “Trust Fund” or “Capital”.
Why would you use a Trust?
Trusts are used for a number of reasons, usually for tax planning purposes or to protect Assets. Other reasons can include:
- Minor children
- Personal injury
- Charitable purpose
How can Greenwoods GRM help?
The Private Client Team at Greenwoods GRM will be able to advise you as to whether this trust is suitable for your circumstances and will explain fully all of the options available to you. We are experienced in working in the role of a professional trustee or working behind the scenes advising the trustees as and when necessary.
Call our Wealth Preservation enquiry line on +44 (0)203 691 2080 and we will put you in touch with a lawyer who can help.
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