Trusts ‐ FAQ
- What is a Trust?
- What type of Trusts are there?
- When are Trusts used?
- When would you need a Trust?
- Who is involved in a Trust?
What is a Trust?
A Trust is a way to leave/give your assets to beneficiaries. Unlike a straightforward gift, beneficiaries receiving gifts made in Trust do not have full control over the asset given. Many people use a Trust in conjunction with a Will to pass on their assets in a manner they feel is appropriate to a particular beneficiary.
What type of Trusts are there?
There are many different forms of Trusts:
- Bare Trusts - property is held in the name of the Trustee but the named beneficiary can take control of the income and Trust property at any point. It can be used to pass gifts on to children during your life.
- Interest in Possession Trusts - these give the beneficiary a legal right to the Trust's income but not the actual property. This allows you to leave the income from the Trust property to one person and the property to someone else when the person in receipt of the income dies.
- Discretionary Trusts - these can be complex and are used for many purposes. The Trustees of such Trusts have discretion to pay income and capital to a wide class of beneficiaries.
When are Trusts used?
Trusts can be set up both during your lifetime and, when included in a Will, on your death.
When would you need a Trust?
Trusts are designed for a number of different purposes and reasons. They are used when a person is too young (i.e. is a minor - under the age of 18 years) or is unable (e.g. due to lack of mental capacity) to manage their own affairs and also to pass on money or property whilst alive.
Who is involved in a Trust?
The settler will create the Trust and state how the property and income will be used. The Trustees are described as being the legal owner of the Trust property. They will also be in charge of administering the Trust. The beneficiaries are those who will gain from the property that is held in the Trust.