Trust Solicitors

trust solicitorsThere are many things that need to be considered when setting up or running a trust.  At Elite Law, our experienced trust solicitors have been advising and assisting clients over a number of years on making all types of trust arrangements.

A trust is a legally enforceable arrangement wherein named trustees are directed to look after assets placed in a trust fund for the benefit of trust beneficiaries.

Trusts allow a person to surrender ownership of certain assets while still maintaining control over how those assets are kept and distributed.

Trusts can help with estate management and inheritance tax planning, as well as safeguarding assets from business or relationship breakdowns and ensuring they will be available for future generations.

However, trust law is extremely complex, with many different types of trust, and selecting trustees must be done with great care. Additionally, the ongoing administration of trusts can be challenging and time-consuming, which is why we would always advise involving experienced solicitors in the process of setting up the trust and in its ongoing management.

Our team of trust solicitors act for clients in Buckinghamshire, Hertfordshire and throughout the UK. In addition to office meetings, we offer remote meetings via telephone or video conferencing software such as Zoom and Skype.

If you are considering setting up a trust and would like specialist legal advice or assistance please call us on 0800 086 2929, email info@elitelawsolicitors.co.uk or complete our Free Online Enquiry Form to arrange a free, no-obligation discussion with one of our experienced trust solicitors.

How Do You Set Up A Trust?

Setting up a trust is not something to be considered lightly or done on a whim. Becoming a trustee is a serious responsibility, and one that should not be granted to someone without forethought and consultation.

Passing assets into a trust is an irrevocable decision, meaning you cannot dissolve the trust and reclaim your assets. It should therefore only be done once you are absolutely certain of your decision, and the beneficiaries and terms should both be decided upon carefully.

The law dictates that for a trust to be valid, it must establish three certainties:

  1. The intention of the settlor to create it;
  2. The subject matter (assets) that will make up the trust property;
  3. The objects (beneficiaries) who will receive the income and assets from the trust.

To set up your trust in a way that establishes these certainties beyond dispute, you will need the help of an appropriately qualified legal professional – ideally a solicitor with knowledge of legal, financial and tax matters. They will be able to advise you on important aspects of the trust and will prepare the paperwork required to make it legally binding.

There are however some steps that you can take before approaching a legal professional, or during your initial conversations with them. The first actions towards setting up a trust should be:

  1. Identifying the assets to be placed into the trust. A detailed list of all assets and their values will save time when it comes to delineating the trust property.
  2. Decide on the individuals you wish to nominate as trustees.
  3. Decide on the beneficiaries. You should also think about the proportion of assets or income that will pass to each beneficiary.
  4. Consider the terms. You will iron out the details in conversation with your solicitor, but you can begin to think about your broad aims for the trust right away. Ask yourself: what are your objectives? How should beneficiaries receive income? How should the trust be managed? How might it be terminated?

What Are The Different Types Of Trust?

There are many different types of trust, and which one is most useful to you will depend on your specific needs. Some of the most common types of trust are:

Bare trust: This is the most simple type of trust and is commonly used to hold assets on behalf of younger beneficiaries, to be passed on to them once they reach an appropriate age.

In England and Wales all assets and income in a bare trust will pass to the beneficiary once they turn 18, while in Scotland, the beneficiary can access the trust at 16.

Interest in possession trust: Beneficiaries of an interest in possession trust receive all net income from it immediately and can use trust assets, for example living in a property held by the trust.

The trustee can use the income to pay the trust’s expenses, with the remaining money passing onto the beneficiary, while the assets themselves remain untouched until the interest of the initial beneficiary ends when the assets pass to another beneficiary or beneficiaries specified in the terms of the trust.

Discretionary trust: The arrangements for a discretionary trust grant the trustees power to choose when and how to distribute income and assets to beneficiaries. It is down to the trustees’ discretion to determine what conditions must be met in order for any potential beneficiary to receive any benefit from the trust.

This type of trust is often used to limit the access of a person deemed irresponsible with money or otherwise unable to handle the responsibilities of an inheritance, so that the assets can be safely preserved and passed on to future generations.

Accumulation trusts: These type of trusts allow for income from the trust to be retained by the trustees for a period of time and added to the capital.

Mixed trusts: The beauty of setting up a trust is the possibility of creating something entirely bespoke and suitable to the needs of all parties involved. Mixing elements of different trusts can be a very effective way to arrive at a solution that’s just right for you, though you will need to bear in mind that each element of it may be subject to different tax rules.

Settlor-interested trusts: In certain cases, a settlor can set up a trust in a way that allows them to benefit from it themselves (or, as is often the case, allow a spouse to benefit from a trust containing some previously shared assets). Usually, this type will, in the main, be either an interest in possession, accumulation, or discretionary trust.

In addition, there are different rules and tax exemptions if the trust is set up to benefit a vulnerable person or to take care of someone with a disability or medical condition.

Essentially this means that a trust can be tailored to meet your specific needs, and how exactly your trust functions is something you will be able to decide with the help of your solicitor.

In addition, there are different rules and tax exemptions if the trust is set up to benefit a vulnerable person or to take care of someone with a disability or medical condition.

Essentially this means that a trust can be tailored to meet your specific needs, and how exactly your trust functions is something you will be able to decide with the help of your solicitor.

When Would A Trust Be Useful?

You might consider setting up a trust for any number of reasons. If you wish to leave assets to family but are not certain that they will act responsibly if given a lump sum, a trust can be set up to pay an income instead.

If you have grandchildren, you can set up an interest in possession trust to allow your children to take an income from the interest generated by your assets while safeguarding the assets themselves for your grandchildren. This is just one of the ways a trust can be useful in establishing a lasting legacy that ensures multiple generations of your family will benefit from your estate.

Trusts can also be set up to benefit charities and other organisations, should you wish to use your estate to benefit a cause you care about.

What are the advantages and benefits of setting up a trust?

There are many advantages to setting up a trust. Trusts offer a level of protection and control of assets that other wealth management and estate planning options often cannot match.

One of the most common reasons for setting up a trust is to provide for an individual who is not capable of handling their own financial affairs, whether because they are too young, are incapacitated, or for various reasons cannot be trusted to sensibly take care of the assets the settlor wishes to pass to them. In all of these circumstances, appointing a trustee to act as a responsible middle-man between settlor and beneficiary can provide valuable peace of mind for the settlor.

A second benefit of setting up a trust is the possibilities it grants for establishing a lasting legacy. For those wanting to pass their wealth down through successive generations, trusts allow for arrangements whereby, for example, the settlor’s children can benefit from the income generated, while the assets themselves are held for the grandchildren to come of age.

Likewise, trusts allow wealth to be used to support charities, sports teams, and other institutions the settlor may wish to provide for.

A final benefit of setting up a trust is the advantages it provides for managing and mitigating the effects of inheritance tax.

Setting up a Trust Fund to avoid inheritance tax

In the UK, inheritance tax (IHT) is applied to any portion of an estate that exceeds the threshold of £325,000, at a rate of 40% (unless the estate is being passed to a spouse, civil partner, or charity).

 As a quick example, if the total value of your estate (including property and other assets and investments) is worth £1,000,000, then £645,000 of that will be taxed at 40%, for a total IHT bill of £250,000.

 However, because assets placed into a trust are no longer considered the property of the settlor, after a period of seven years (provided the settlor does not have any interest in the trust) these assets will no longer be factored into the value of the settlor’s estate.

 It is important to note that different types of trust will be subject to different tax rules, and that they should not be looked on as simply a way to circumvent inheritance tax.

 The reality of estate taxation is much more complicated than that, which is why it is so important to involve an experienced solicitor in your estate planning as early as possible, particularly when trusts are involved.

How much do solicitors charge for setting up a Trust?

Despite their reputation as being exclusively reserved for the rich, it does not cost that much to set up a trust.

Typically, a solicitor will charge around £1,000 in fees for setting up a trust. This may sound like a lot, but over the course of your lifetime you may recoup many times that amount due to the tax benefits that come with removing assets from your estate and placing them in the trust.

If you cannot identify anyone known personally to you who may be a suitable trustee, you can also pay for a professional service to manage your trust. Before choosing this option, though, you should consider how much the fees of a service like this will impact the eventual value of the trust.

It is technically possible to draw up the legal paperwork yourself, but the risks of doing so are exceptionally high.

A trust can easily become liable to challenge, and without having the knowledge and experience of a legal professional involved in its creation, it could be found invalid.

The peace of mind that comes with ensuring your wealth is safeguarded for future generations is almost always worth that initial outlay in legal fees.

How Our Trust Solicitors Can Help

Setting up and administrating a trust is complex, and requires expert knowledge of trust law, tax rules and exemptions, and a broad knowledge of estate planning and probate.

Our team of trust solicitors have extensive experience setting up trusts for clients with estates of all sizes and many different needs. We can advise on the best type of trust for you and can assist you if you are trustee concerned with meeting the responsibilities you have been given.

We regularly advise clients who wish to set up trusts for various purposes such as estate planning, asset preservation and protection of vulnerable beneficiaries.

We also advise trustees regarding their role as trustees and their options, particularly in relation to discretionary trusts.

Cost-Effective Trust Solicitors

Our services are cost-effective and competitive, and we will always give you a clear indication of our charges. We are happy to provide one-off advice at certain points of the legal process or on particular areas of concern as they arise.

One of our experienced trust solicitors will have an initial consultation with you, free of charge, to discuss your situation in more detail.

Once we understand your circumstances better, we can provide you with a clearer understanding of how we can help you.  We will also provide you with a price quotation and a choice of funding methods at the outset.

Make A Free Enquiry

Call 0800 086 2929, email info@elitelawsolicitors.co.uk or complete our Free Online Enquiry Form to arrange a free, no-obligation discussion and let one of our experienced probate solicitors explain your legal rights and options.

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    Meg Wilton

    Head of Department &
    Chartered Legal Executive
    Private Client

    “Meg Wilton has guided us through the process of amending our wills, changing the way my wife and I own our home and setting up new powers of attorney in the most professional, helpful and friendly way. We are grateful to her and to Elite Law Solicitors. We shall recommend you to our friends.”

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