Trust

A trust (sometimes known as a trust fund) makes sure that your funds are going directly into the hands of those you wish. It’s a means of securing your money for after you are gone, or to support beneficiaries in life — allowing you to see the benefits of your inheritance before it is too late.

What is a Trust?

A trust is a highly valuable estate planning tool. One that can be beneficial regardless of your background, your net worth, or what you have to leave behind. The purpose of trusts is to provide peace of mind. You can place assets aside for loved ones, so they can benefit from them in a responsible manner.

When it comes to a trust, there are generally three parties involved. The person providing the fund is called the grantor, the one inheriting is the beneficiary, and the party managing the fund is referred to as the trustee. The role of a trustee is to ensure that the assets are used in accordance with the grantor’s wishes. This prevents spending sprees and funds being used outside of the wishes of the grantor, allowing beneficiaries to enjoy their windfall responsibly.

As the grantor, you can set out the precise terms of the fund however you see fit. The conditions you put in place will outline how and when your assets are to be distributed by the trustee. Common practice is for funds to become accessible once a beneficiary reaches a certain age or achieves a milestone in life (graduating university, getting married etc.)

Trusts can come in a variety of different forms and guises depending on the unique situation behind them and the stipulations dictated. The different types of trust available include: asset protection trusts, family trusts, and property protection trusts.

It is possible to hold all manner of different assets in a trust. This includes but is not limited to:

  • Money
  • Stocks
  • Assets
  • Family Heirlooms
  • Real Estate
  • Businesses
  • Land

Why Set Up a Trust?

protection and support for your loved ones. Trusts should be seen as cornerstones of estate planning. This is vital if you want your money to go as far as possible, or have specific requests regarding how/when it is to be handed out.

A fund is designed to benefit anybody, regardless of how many assets they have. This is because a trust is the best method of managing assets and ensuring that they are distributed exactly according to your wishes.

However, they can be complex to understand if you are unfamiliar with their structure. This can put a lot of people off and force them to automatically pivot to a will without considering if trusts would be a better option. If you are unsure about setting up a trust, contact a specialist today who will talk you through the process.

A huge benefit of a trust is that, unlike a will, you are able to see your assets distributed before you have passed away. The flexibility that comes with this form of estate planning means that you are able to see your money contribute to your chosen organisation, pay for the education of your family, and more. Additionally, a trust ensures that you bypass probate, saving your beneficiaries large amounts of money. This ensures that your money is able to go a lot further.

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Setting up a trust could be the best option for the long-term distribution of your assets and funds. Protect and support your loved ones with the help of our specialist team. Click the button below to get started.

How to Set Up a Trust

Setting up a trust to support and care for your loved ones either before or after you are gone can be vital in the enrichment and betterment of their lives — without including some of the added stresses that can come with other forms of bequeathment.</p> <p>The process of setting up a trust of your own should always include the following:

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Do Your Research

The first step of the trust process should always be to do ample research to ensure that you are making the best decision for you and the long-term security of your assets. Deciding between a will and trust can be difficult. Both have their pros and cons.

For example, a trust is excellent for avoiding probate and reducing estate, whereas a will lessens the inheritance tax etc.

The best way to work out which option is best is to research both — look at your assets, review the fees associated with both and decide what you see as the best choice. If you are struggling to decide, you may wish to contact an independent specialist who would be able to make a recommendation using all evidence available.

Choosing-an-Executor

Select Your Trustee(s)

Three parties are required in order to properly establish a trust: the grantor, the beneficiary, and the trustee. The trustee is the most important person in the process as they are there to ensure your assets and funds are distributed properly if you are unable to.

A trustee will also offer support to the beneficiary should they require it. They will be there throughout the entire process, explaining your wishes and making sure the beneficiary understands the terms laid out.

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Identify Assets

It is important when establishing a trust that you have a clear and exhaustive list of your current assets. Having a good idea of all the assets you wish to place into the fund, as well as their values will save a great deal of time down the road. It also allows you to be more specific with where you wish certain items to go.

Family-Trusts

Choose Beneficiaries

Deciding on a beneficiary/beneficiaries usually comes down to close young family members such as your children, nieces/nephews etc., or even an organisation you are passionate about supporting, such as a charitable foundation.

Once you have decided on your list of beneficiaries, you can then consider which assets will go to certain beneficiaries and the amount they will receive.

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Decide Terms

With most of the important decisions finalised, the last important thing to consider is discussing the final term with your solicitor. Things to consider at this stage include:

  • How funds should be divided
  • At what point assets should be distributed
  • How should the trust be managed
  • Can the trust be cancelled for any reason

Types of Trust

There are multiple different types of trust you can choose from. These different versions of trusts will usually depend on exactly which assets you are looking to pass on, who your beneficiaries are, and how you wish to control your assets. Three common types of trust are: asset protection, family trust, and property protection.

Asset Protection

An asset protection trust is a specialist trust that shields the grantor’s assets against any creditors. An asset protection is one of the best protections against creditors you can have.

Asset protection trusts are watertight — meaning that should the beneficiary wish to sell, spend, or give away any of the assets contained in the trust they must meet the specific stipulations of the agreement.

Family Trust

Family trusts are types of trusts which specifically list family members as the beneficiaries. A family trust is a living trust, meaning that it can take effect before the grantor has passed away.

The flexibility in the setup of a family trust means that the grantor can stipulate if it can be altered at any time. You are also able to name yourself as trustee should you wish with successors in case you become incapictated.

Property Protection

This unique type of trust is one with specific instructions and stipulations that state that a surviving spouse is able to continue living in your property, but your share of the property remains separate.

Generally this is so that a child or other loved one is able to inherit once the surviving spouse dies.

How Does a Trust Work?

There are many different types of trust, each with unique and specialist benefits and drawbacks depending on your situation. Further information on how asset protection, property protection, and family trusts are:

Asset Protection

The core purpose of an asset protection trust, unlike other types of trusts, is not to pass money on, it is to protect it from creditors.

An asset protection trust is irrevocable. This means that once assets have been listed and transferred into the care of the trust, they cannot be accessed unless conditions are met.

Family Trust

A family trust is likely the most well-known type of trust. It is a way for a trustee to leave their possessions; including money, heirlooms, assets such as cars, homes, or even pets, to loved ones, friends, or charitable organisations,

A family trust can be altered at any time, and can even be accessed prior to the death of the trustee should they wish.

Property Protection

Property protection trusts can be difficult to set up due to moving parts and potential complications. This type of trust specialises in situations where the trustee passes their share of a property over to a party, usually children. However, the property only actually passes to the beneficiaries when the surviving spouse living in the property dies.

When to Set Up a Trust

It is important when deciding to set up a trust that you begin the process as soon as possible. Things can change very quickly in life. If you keep putting it off, your fund might never get completed and you could leave your loved ones in the dark.

Additionally, the sooner you set up your trust the more you can avoid one of the biggest mistakes many grantors make; not reviewing. Regular reviews of your trust are vital. Things can change since the last time you looked at your trust and it is important that your estate plan changes as well to reflect this. An out of date plan can be almost as complicated as no trust at all.

There are a few important things to always be aware of and reviewing when it comes to your trust. This includes:

  • Have there been any deaths that invalidate the trust
  • Is your trustee still the right choice
  • Has there been any new births in the family that should be added to the trust
  • Have there been any deaths that need to be reflected
  • Are there any other beneficiaries to be added

When Can You Access a Trust Fund?

The accessing of trusts is generally tied to the specific stipulations of the trust in question. For family trusts or asset protection trusts, generally the assets are accessible once the beneficiary has reached 18 or 21 years of age, has graduated from university, gotten married, or had children.

A property protection trust is a little less cut and dry. In a situation where it is stipulated that a spouse is able to remain in the home, the trust becomes active and the property passes over to the beneficiary once the surviving spouse has passed on, or is no longer able to live in the property.

It may be possible to access a fund early. However, to do so the beneficiary will generally need the full cooperation of the trustee(s).

Traditionally, the trustees are basing their decisions on the direct intentions of the grantor, meaning that if the beneficiary can’t convince them that the early release of assets is justifiable then they have no legal right to do so.

Should the issue be serious enough, it may be possible for beneficiaries to take the trustees to court over their failure to release the funds early. However, it is worth remembering that the courts more often than not will recognise the authority of the trustees.

Why Use Just Wills and Legal Services to Set Up a Trust

When it comes to protecting your assets, and supporting your loved ones, it is important that you work with a company you can have faith in. Here’s what makes Just Wills and Legal Services stand out:

Longevity

Over the course of their long and successful careers in their fields, our team has helped thousands of clients gain peace of mind; safety in the knowledge that their affairs are in order and will be looked after once they are gone.

Quality

Since our inception, we have worked incredibly hard to make a name for ourselves in the industry. We are proud to today be highly-regarded among our clients, as well as our peers in the legal profession.

Trustworthy

When it comes to sensitive matters like peace of mind and security after death, trust is the most important thing. We’re aware of exactly what is expected of us, and how to act to ensure total transparency and honesty throughout proceedings.

Set Up Your Trust Today

Get in touch today for specialist guidance and assistance when it comes to setting up your trust.

Related Articles

Learn more about the trust-making process from our selection of articles.

  • It’s important to understand the key differences between a will and a trust, as they are the two most common methods for planning your estate and protecting your loved ones when you have passed on.This is to ensure that all of your assets remain protected against any eventuality — particularly if something was to happen to you suddenly.. In this blog, we will detail how wills and trusts work, what the difference is between the two, which is better, and determine what makes them so important. How Does a Will Work? A

  • It is estimated that over 60% of all adult Brits do not currently have a will. This figure equates to around 30 million people who, as of right now, are unprotected against the unforeseen. Common reasons stated in research as to why people have not made a will include:Belief that they have nothing worth inheriting They simply haven’t considered making one People stating that they are too busy to write a will The reasons to write a will are significant for everybody, no matter their background or the size of

  • We're Willing Bees with every Will we write this summer. The Just Wills and Legal Services Willing Bees campaign is inviting new customers to create their very own ‘micro-meadow’ by donating a Bee Saving Kit to each household that writes their Will with us this summer.Willing Bees with Every Will we Write We hope to donate as many Bee Saving Kits as possible. If we can plant them all our Bee Saving Kits will create enough wildflower habitat to fill: 7.8 Allotments¹ 40 London Buses²  10 UK gardens³Grow native wildflowers with our gift,

Frequently Asked Questions

How Do Trust Funds Pay Out?

A trust fund can be paid out depending entirely on the wishes set out by the grantor. The fund can be paid out either in one lump sum on a date specified, or in smaller increments to be spread out over several years, or on different milestones.

How Much is Needed to Start a Trust?

While the practice may be most commonly associated with the wealthy; trusts can be applicable to anybody. All you need is the funds required to pay for setting up the trust itself.

Do Trusts Pay Taxes?

Trusts do not pay taxes. One of the key benefits of utilising a trust is that it can offer important tax benefits for your beneficiaries compared to a will. Generally, a beneficiary of a trust will pay taxes on the distributions they receive instead of the fund itself paying tax.

Are Trusts a Good Idea?

A trust can be an excellent way to leave assets and funds to loved ones while stipulating exactly what happens to them and when. It is also good to limit tax on the inheritance. However, trusts are complicated. It is always a wise idea to contact a solicitor to discuss the finer details of a trust.

Can You Put Your House in a Trust?

You are able to place property into a trust for your beneficiary to inherit at a later date. There are also specific types of trust dedicated to homes. Asset and property protection trusts are two examples of trusts that are designed with assets like homes in mind.

Contact a specialist for more information placing your house in a trust and the intricacies of such a situation.

How Much Does a Trust Cost?

The cost of setting up a Trust will depend on the type of Trust, as well as its complexity. Once we have assessed your individual requirements, we can give you an accurate estimate of the cost involved.

How Long Do Trusts Last?

Trusts generally will only last a few years — until a beneficiary reaches the specified age of inheritance. However, the stated time a fund can last for is generally up to 125 years for a personal trust. There is no limit to a charitable trust.

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