Trusts are one of the most flexible, versatile vehicles for holding and managing assets. Here, the Turner Little team explains how you can open a trust.
What is a trust?
A ‘trust’ is a separate legal entity which is designed to hold assets and property. The assets and property are held by the trust for the benefit of a particular person, group of people, or organisation; they’re called ‘beneficiaries.’ Meanwhile the person who creates the trust is known as either ‘grantor,’ ‘donor’ or ‘settlor.’
Benefits
There are a range of reasons why you might establish a trust, and it depends on your personal circumstances. You can use a trust to provide for family members e.g. children, who lack financial experience, or who are unable to manage their own assets. Alternatively you can use it employ management for your assets if you’re unable to manage them yourself or to avoid probate, so assets will be transferred to beneficiaries immediately after you pass away. Furthermore, a trust can either reduce estate taxes or provide you with the liquid assets necessary to help pay off said taxes.
Types of trust
This brings us to the next point; there are two basic types of trust – ‘living’ and ‘after-death.’ As you would imagine, you set up a living trust for someone else while you’re still alive. Alternatively an after-death trust (often written into a will) comes into effect after a person dies and is subject to the probate process. Click here for more in-depth information on the types of trust.
Trustees
When you set up a trust you’ll need to appoint a trustee. They’re responsible for managing the assets held in the trust, and you can choose whoever you like to fulfil this role; a family member, a friend, someone with financial experience or even a corporation. The person/party (you can appoint more than one trustee) you choose depends on your personal requirements. If you want a trustee who you know well, you might want to opt for a family member or friend. If want experience, investment skills and impartiality, a corporate trustee may be preferable.
Establishing a trust
With this information, you can establish a trust and to do so you’ll need to have a ‘trust deed’ drawn up to your specific wishes. This should list you as the grantor, your beneficiaries, the trustees you wish to manage your assets, and how these trustees are allowed to behave when carrying out their duties. The deed should also include the name of a ‘protector’ who can veto trustee decisions and dismiss/appoint new trustees if the need arises. They won’t have any day-to-day responsibility for running the trust.
After you’ve established the trust, you can transfer assets into it. However you should bear in mind that you may incur stamp duty or capital gains liability when you transfer certain assets, such as property. Meanwhile we should add that in some jurisdictions you’ll be required to register a trust. Generally there is no requirement to do so, but this will depend on local legislation.
Turner Little
Turner Little has the experience, skill set and legal expertise you require to set up a trust. If you fill in our trust application form our in-house team will assess your requirements, and discuss any implications relating to the trust with you, to ensure you receive the trust you need to hold and manage your assets effectively.
Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agents, Registered Bank Intermediaries and Business Consultants, as well as Trust providers.
