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What is a trust?

In broad terms, trusts are a separate legal body that can own and manage assets, they are run by trustees for named beneficiaries.

Why should I create a trust?

There are many reasons why you may wish to create a trust, for example:

  • To securely pass on assets to future generations.
  • Provide for vulnerable or disabled beneficiaries.
  • Mitigate tax.
  • Provide for children and partners from different relationships.
  • Protect entitlements to means tested benefits.
  • Set out joint property ownership arrangements.
  • Minimise or eliminate the risk of assets being attacked on insolvency/bankruptcy or divorce.
  • To retain control over assets you wish to give away and control and limit who can inherit from you.
Landlords on the defensive, yet again

What assets can a trust hold?

There are very few exceptions to the assets a trust can own, and trust assets typically include land, property, cash, shares, bonds, possessions, life policies and pensions.

When a lifetime trust is created, the Settlor will decide what assets are to be ‘settled’ or put into the trust. Ownership will be changed by a legal transfer from the Settlor to the trustees. For cash, the trustees will usually open a bank account.  For a Will Trust special provisions must be included in the Will.

How is a trust created?

A trust is created by a Will if it to come into effect after death or while a person is alive by a trust Deed or a Deed of Variation. To be valid, a trust will usually set out:

  • Who is creating the trust (the Settlor).
  • The rules of how the trust is to be managed.
  • What type of trust is being created.
  • What assets are going into the trust.
  • Whether other assets can be added later.
  • Who is going to manage and administer the trust (the Trustees).
  • Who can benefits from the trust (the Beneficiaries) and when.

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Simon Levine LLB (Hons), Solicitor, TEP

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