Choosing the Right Trust for You
Trusts can be beneficial for many reasons, and it is important to choose a type of Trust suitable for your needs. Trusts can be set up for a host of reasons, such as a way minimise inheritance tax; to reduce care fees impacting on your estate; to provide an income later in life; or to avoid a situation where your children from a previous marriage are disinherited.
Speak to one of our Trust & Estate Planning Consultants about setting up a Trust specific to your needs. Our team are highly skilled and experienced in setting up the most complex Trust arrangements and can guide you smoothly through the entire process.
Appointing a Trustee
When you set up a Trust arrangement, you are asked to appoint one or more trustees to look after the assets. The trustee (the person charged with looking after the property) will have legal title to the Trust property which means the property will appear to be one of complete ownership and possession. However, the trustee has no right to receive any benefits from the property; the equitable title (the right to benefit from the property) belongs entirely to your beneficiary. The terms of the Trust are decided by the person creating the Trust, who can decide on the extent of the trustee’s powers and the rights of the beneficiary.
The law of Trusts is often highly complex. It is therefore essential to take full advice when considering establishing a Trust. We think writing a Will or a Trust should be a straightforward process, which is why we do everything to ensure you are fully informed of your options throughout the process and will do everything we can to take the stress out of making a Trust.
When choosing a trustee, it is important you know the person to be responsible and trustworthy, and good organisational skills would be beneficial. We would strongly advise you speak to whoever you’re considering as a trustee before you appoint them and ask them to agree to taking the role. This is important as a reluctant trustee will not do as effective a job as a willing one. It is also possible the trustee refuses to take on the role after your death. Being a trustee can be a challenging and time-consuming role, and trustees will often require the services of a professional Trusts specialist to guide them through their duties as a trustee.
What are a Trustee’s Responsibilities?
The trustee’s responsibilities vary depending on the type of Trust and the terms created. These can vary widely, and there may be specific instructions that the trustees should carry certain duties on a regular basis, as well as obligations arising from Trust law.
Depending on the terms of the Trust, a trustee may appoint a professional Trust specialist to carry out some, or even all of the duties involved, though ultimately, the legal responsibility falls on the trustee.
Tax Responsibilities of the Trustee
If there has been no tax return form sent, the trustee must notify the Inland Revenue that tax is due, within six months of the end of the tax year. They must also keep records of any Trust income or gains as well as be responsible for completing any tax return issued. The trustee is also responsible for paying the tax due on the income or capital gains of the Trust, and is responsible for notifying the beneficiaries of any income they have received from the Trust in the tax year and how much tax has been deducted.
What Happens When a Trust is Wound Up?
If a Trust is wound up the trustees should notify the Inland Revenue Trusts office and complete a tax return for the period up to the date the Trust is wound up, and making provision for tax due. Failure to make provision for tax before distribution could see you paying the tax out of your own pocket.