Trusts

Trusts can provide a flexible way to protect assets, provide for family members and control how wealth is managed or passed on in the future.

However, setting up a trust isn't simply about transferring assets into a particular structure. The type of trust you choose, how it is drafted, who you appoint as trustees and the tax implications can all have significant long-term consequences.

At Eaton Smith, our solicitors can help you decide whether a trust is appropriate for your circumstances and put arrangements in place that reflect what you actually want to achieve.

What can a trust help you achieve?

People sometimes assume trusts are only relevant to very wealthy families. In reality, they can be useful in many different circumstances.

A trust may be considered if you want to:

• preserve assets for children or future generations
• provide for children who are still young
• protect the interests of a vulnerable beneficiary
• control when and how someone receives an inheritance
• provide for different family members at different stages
• plan for succession and the transfer of family wealth
• hold or manage assets on behalf of another person
• incorporate trusts into wider estate and inheritance planning

The important question isn't simply "Should I have a trust?" It is" What am I trying to achieve, and is a trust the right way of achieving it?"

Types of trust

There are several different trust structures and the appropriate option will depend on your circumstances, objectives and the assets involved.

Discretionary Trusts

A discretionary trust gives trustees discretion over how and when assets or income are distributed between a defined group of beneficiaries.

They can be particularly useful where flexibility is important or where future circumstances cannot be predicted.

Bare Trusts

Under a bare trust, assets are held by trustees for a beneficiary who is ultimately entitled to those assets. They are often used when assets are being held for children or younger beneficiaries.

Life Interest Trusts

A life interest trust can allow one person to benefit from an asset or receive income during their lifetime while preserving the underlying asset for other beneficiaries in the future.

They can be particularly relevant where someone wants to balance the needs of a surviving spouse or partner with those of children or other beneficiaries.

Trusts for Vulnerable Beneficiaries

Where someone is vulnerable or unable to manage significant assets themselves, a trust may provide a structured way of managing money or property for their benefit.

Compensation Protection Trusts

A Compensation Protection Trust allows compensation to be held separately from your personal assets by appointed trustees for your benefit. By placing compensation into a trust within the relevant timescales, you can often protect your eligibility for means-tested benefits while ensuring funds remain available to support your future needs.

Creating a Trust

A trust needs to be structured carefully from the outset.

Our solicitors can advise on:

• whether a trust is appropriate for your objectives
• the most appropriate trust structure
• choosing trustees
• identifying beneficiaries
• preparing the trust deed
• transferring assets into the trust
• trustees' powers and responsibilities
• how the trust fits alongside your Will and wider estate planning
• relevant tax and reporting considerations

Advice for trustees

Becoming a trustee brings legal and administrative responsibilities. Trustees must understand the terms of the trust, act in the interests of its beneficiaries and manage trust assets appropriately.

Our solicitors can advise trustees on:

• understanding the terms of a trust
• trustee powers and duties
• dealing with trust assets
• distributions to beneficiaries
• changes in trustees
• record keeping and administration
• bringing a trust to an end
• obtaining specialist advice where investment or tax issues arise

Related Services

• Estate Planning
• Wills 
• Probate & Estate Administration
• Lasting Powers of Attorney
• Compensation Protection Trusts

Trusts and Estate Planning

A trust shouldn't normally be considered in isolation.

Depending on your circumstances, it may need to work alongside your Will, inheritance tax planning, gifting arrangements and wider estate planning.

That is why we look at what you want to achieve first, rather than simply recommending a particular legal structure.

For some families a trust can be an effective part of their plans. For others, a different arrangement may be simpler or more appropriate.

Speak to our Personal Legal Planning team today