Trusts are legal arrangements where assets are placed into the care of an individual or organisation that manages them for the benefit of someone else. For the person setting up the trust, this arrangement means they know their assets will be properly looked after until they come under the legal control of the beneficiaries.
Crucially, there are also tax advantages to setting aside assets in a trust, especially in the context of estate planning. That’s why we want to go over them with you.
Types of Trusts
There are many different types of trusts, which all work in their own way. They include:
Bare trusts
Assets placed in a trust are held in the name of a trustee, yet the beneficiary has the right to all trust capital and income when they turn 18 (or 16 in Scotland).
Interest in possession trusts
The beneficiary receives income generated by the trust but is not entitled to the underlying assets.
Discretionary trusts
The trustees have absolute power over how the trust assets are used and distributed. Very popular with grandparents, who often name their grandchildren as the beneficiaries and their children as the trustees.
Knowing which type of trust is right for you can be difficult. Talk to us, and we’ll help you decide the route to take.
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