Private Client

Trusts & Settlements

Too often these are thought of as simply devices to save tax. Whilst trusts may often be used for tax planning, their more fundamental purposes are:

To protect vulnerable persons for example children or those who have difficulty managing their affairs

To protect assets for example a property or shares in a family company

Trusts can be (and often are) set up in a Will. However people also frequently establish them in their lifetime, for example, parents may wish to hand over a property or other assets to children, but be concerned about the children having outright ownership or control at the outset.

There are different types of trust but the main ones are:

A "Life Interest" or "Interest in Possession Trust" under which a beneficiary has the right to the use and enjoyment of (or the income from) the assets of the trust, but does not have the ownership of the assets

A "Discretionary Trust" under which, as the names suggests, the Trustees have a discretion as to which of the beneficiaries are to benefit and when and how

An "Accumulation & Maintenance Trust" or "Children Trust" under which the Trustees have power to use the trust assets for the maintenance or education for beneficiaries until they reach a certain age at which point the children become entitled to the assets or the trust converts into an "Interest in Possession Trust".

Following on from the last point, a trust may often be drafted in such a way that it can be converted from one type to another depending on the circumstances.

For more information contact
Alistair Sursham

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