Trust Solicitors

A trust is simply a way of separating the ownership of something from the benefit of it. One or more trustees hold money, property, investments or other assets, and they look after those assets for the people who are meant to benefit, known as the beneficiaries. The arrangement is set out in a trust deed or in a will, and the trustees are bound to follow it.

Trusts have a reputation for being complicated. In practice, once the purpose is clear, the structure usually follows naturally, and that is where advice helps most.

Why people set up trusts

Most trusts exist for a practical reason rather than a technical one. A parent may want to make sure that money reaches a child at a sensible age rather than the moment they turn eighteen. A family may want to provide for a relative who is vulnerable, or who receives means tested support, without that provision causing problems elsewhere. Others want to keep a share of a property safe for children from an earlier relationship while a surviving partner continues to live there.

Trusts are also used to hold assets for someone who cannot manage them, to keep control over how and when wealth passes down the generations, and to deal with gifts made during a lifetime. The right answer depends entirely on what you are trying to achieve and who you are trying to look after.

Common types of trust in general terms

• Bare trusts: the beneficiary is absolutely entitled to the assets, and the trustee simply holds them, often until a child reaches adulthood.
• Life interest trusts: one person has the right to income, or to live in a property, for their lifetime, with the capital passing to others afterwards.
• Discretionary trusts: the trustees decide which of a class of beneficiaries benefits, and when. This flexibility is useful where future circumstances are unknown.
• Trusts for disabled or vulnerable beneficiaries: designed so that support can be provided carefully, with special treatment available in certain cases.
• Will trusts: created on death by the terms of a will rather than during a lifetime.

These categories overlap, and the label matters far less than whether the terms actually do what you want.

What trustees are expected to do

Being a trustee is a genuine legal responsibility, not an honorary title. Trustees must act in the best interests of the beneficiaries, follow the terms of the trust document and the general law, keep trust assets separate from their own, and avoid conflicts between their own interests and their duties. They should invest prudently, take proper advice where they lack the necessary knowledge, keep accurate accounts and records, and act fairly between different beneficiaries.

Trustees also have administrative obligations, including registration requirements and, where relevant, reporting to HM Revenue and Customs. Decisions usually need to be taken together, and it is sensible to record the reasons behind them. If you have been asked to act as a trustee, it is worth understanding what you are taking on before you agree.

Tax and advice

Tax is often the first question people ask about trusts. Treatment depends on the type of trust, the assets involved, who the beneficiaries are and your wider circumstances. Inheritance tax, income tax and capital gains tax can all be relevant, sometimes at the point the trust is created, sometimes during its life and sometimes when assets leave it. Setting a trust up without understanding this can create unwelcome surprises later.

Brewer Wallace advises on creating trusts, on trusts within wills, and on the day to day duties of trustees, from our offices in Hull, Bridlington and Hornsea. We explain the options in plain English and keep you informed as matters progress. To discuss what you are hoping to achieve, call us on 01482 228808.

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