Trusts are more common than you may think and play a key role in many aspects of everyday life. For example, most company pension schemes are structured as trusts – this structure helps clarify the administration, regulation and taxation of the pension fund. Similarly many life insurance policies are “written under trust” so that when the person insured dies, the policy pays out to a trust run by the insurer, which then pays the cash out in line with the insured person’s wishes. The trust structure helps both minimize Inheritance Tax and ensures that the deceased’s wishes about how the insurance funds are to be distributed can be followed accurately and quickly. Trusts are also very commonly used for charitable funding.

For most people, however the type of trust that they are most likely to be asked to make decisions about personally is a trust established to arrange for their family’s financial affairs. In this context the main attraction of a trust is that they give the person creating the trust (the Settlor) greater confidence about how those assets will be used in the future. Put simply, trusts offer a means of holding and managing money or property for people who may not be ready or able to manage it for themselves. Indeed, trusts can be created to benefit people who are not even born yet – such as any future grandchildren someone may have.

Some of the most common situations where trusts are used (often in conjunction with a Will) are:

• To provide for a spouse / partner after death while protecting the interests of any children
• To protect the inheritance of young children until they are old enough to take responsibility for their own effects
• To provide for vulnerable relatives who are unlikely to be able to look after their own affairs
• To help succession planning in family businesses

Trusts are particularly useful when planning how money and assets should pass from one generation to another, especially when family structures are complicated by divorce and second marriages.

It has been said that for every family problem or situation, there is a trust that can be constructed to suit the need. Creating the right kind of trust to match your particular situation requires specialist help.
We can help you in the setting up of a trust during your lifetime (generally known as a Settlement) or upon your death if you wish to establish a trust in your Will.

We can advise you on the use of trusts in a variety of contexts and assist, not only in their implementation, but also in their management. If a trust has already been established, we can advise the trustees on their responsibilities, including their fiduciary duties and compliance with accounting requirements as well as the general administration and the winding up of a trust.

For advice on Trusts and Settlements please contact:

Ian Shipton on 01934 637 904 e-mail shipton@powellslaw.com, or
Jenny Brading on 01934 637 931 e-mail brading@powellslaw.com.