Why Should I Consider the Use of a Trust?
In the vast majority of cases Trusts are not relevant. However in some situations they may be desirable or even necessary
- If the person you want to benefit cannot look after his/her own money. This may be incapacitated children or even a spouse/partner suffering from dementia
- If you would leave young children if you died suddenly
- If you are not sure who should receive what. For example you run a business but it is too early to know which of your children will come into that business
- If you want someone to have the income but make sure the capital on his/her death goes to whom you wish it to go to. This is sometimes the case with second marriages
- If there are tax reasons for using trusts
In all of these cases the assets are transferred to the names of the Trustees and they manage them in the interests of the beneficiaries.
The income may go to one person as of right or the trustees may have a discretion as to how much they pay to whom. Similarly the capital may go to a named individual(s) of the Trustees may have discretion as to how much they pay to whom.
Trustees to have to abide by many rules which is why the choice of Trustees is so important. If you want them to have discretion as to who will get what you really have to be very careful in that choice.
This does mean that there is an administrative cost – such as filing tax returns and keeping accounts – to using trust funds which is the main reason why they are not right for most people.
Use of a trust fund is a big step and needs to be thought about very carefully. If you think your circumstances are right for the use of a trust fund we will discuss the situation in detail with you; explain in more detail what a trust entails, the different types of trust and help you come to the best decision for you and your beneficiaries.