Trust Solicitors in Plymouth

A settlor is the person that establishes a trust in the first place, by putting assets into it. This process is known as ‘settling’ the assets in the trust.

The settlor will also decide who the beneficiaries of the Trust will be and they are able to place conditions on how the assets should be managed.

A trustee is a person or company appointed by the settlor to manage the trust and its assets. A settlor can appoint themselves to be a trustee and can also appoint successors to take over as trustee when they die.

Trustees must follow any instructions left by the settlor and can only use the trust assets in the beneficiaries’ best interests.

In a discretionary trust, Trustees have more freedom to make decisions.

A beneficiary is someone that the settlor chooses to benefit from the trust. They might receive an income, inherit trust assets, or be allowed to live in a trust property.

It’s possible for a Settlor to also be a trustee and a beneficiary of their own trusts. Other beneficiaries can be trustees too.

To be honest, you can put any asset that you own into a trust, including:

Personal property – including jewellery, art, and other valuable heirlooms

Land and real estate property – including family homes, investment properties, or agricultural estates

Financial assets – including money, stocks, and shares

Life Insurance policies – you can instruct your life insurance policy to pay out to a trust

You’re able to put assets into a trust at any point during your lifetime. Alternatively, you can state in your Will that it should happen when you die.

You can create a trust that you put your savings and home into in order to try and protect it from care fees and sometimes also from the hassle of maintenance of the property.

Not always. The Local Authority have to consider that you put assets into a trust to deliberately avoid paying care home fees. Should this happen, they can pursue the trustees for a period of 6 years after the date of the gift, if you need Local Authority financial support for care within that period.

Trusts are taxed in their own right, and you can lose principle private residence exemption in respect of the sale of your home, if you sell and want to purchase another home. You may also have to pay Capital Gains Tax. Your property may still be part of your estate when you die for Inheritance Tax, even though you would not legally own it.

Most Trusts are now required to register with HM Revenue & Customs which means trustees must both register and keep updating the information held about the Trust.

Trustees may also need to consider whether they are handling data and which General Data Protection Rules may apply to the information they are holding for the Trust administration.

Trusts are subject to a 10 year charge for Inheritance Tax at 20%, so the Trust will pay this every 10 years or part thereof. You will need to register the Trust with HM Revenue & Customs and complete an annual tax return, unless they indicate it is not required. If your Trustees buy and sell taxable assets, Capital Gains tax might also be relevant to your investments.

Trustees should have regular meetings, but how frequently will depend on the kind of Trust it is. This should however, be a minimum of once a year, and they should keep records (minutes) of what is discussed at each Trustee meeting. The Trustees must keep a record of their decisions and the transactions of the Trust Fund.

It might save you having to apply for probate on your death, but the Trust will still need to be wound up and HM Revenue & Customs will need to close their file on the Trust. If you still retain an asset that requires a Grant of Probate, then your Executors might need to apply for Probate anyway.