The most important aspects of a Trust, by estate planning expert Robert Cartmell.
Official Definitions
The Gov.uk website (via Google) gives a useful definition of a ‘Trust’, which is:
“..a way of managing assets (money, investments, land or buildings) for people. There are different types of trusts and they are taxed differently.”
Trusts involve:
the ‘settlor’ – the person who puts assets into a trust.
the ‘trustee’ – the person who manages the trust.
the ‘beneficiary’ – the person who benefits from the trust.
Trusts are ‘living entities’?
I, Robert Cartmell, having worked within the field of Trusts and Wills for over 25 years, like to think of a Trust as a living entity. Imagine it is a person or an avatar of a person (of the creator).
The Trust entity usually comprises actual persons (the Trustees) who are given assets to hold initially and with directions from the creator of how best to pass those assets on to family or beneficiaries.
A Trust can be created on death by a Will or during a person’s lifetime (by a Trust Deed or Settlement).
Trustees are appointed to carry out the wishes. Trustees can actually be a combination of the primary beneficiaries or independent people, or both.
A Trust is a very useful device in order to pass on successive interests – such as passing estate in the first instance to a spouse/widow(er) and then on the death of that spouse/widow(er) to children. It can protect against the widow(er) making changes to their Will after the creator’s death – the assets are protected to pass back to the Trust.
For couples with children I see it as, for example, a husband on his death loaning his estate to his wife. On her death, the value is owed back to his Trust and then protected to pass down to his children notwithstanding his wife’s Will.
Trusts can also be useful vehicles to protect beneficiaries against losing the value on divorce, insolvency, benefits, care fees etc.
The idea of Trusts can take a little getting used to initially (and of course they are then easily forgotten unless you are constantly involved in them) but they do make sense once you go through it properly or have a refresher.
Trusts are designed to ensure your basic wishes are carried out. It is an enjoyable topic and subject to discuss – please do not be afraid of Trusts, embrace them! Saying all of that, make sure you discuss them with an experienced professional before embarking on creating them or being a Trustee.
If you would like help or advice from Robert Cartmell on the issues raised in this article, please get in touch. Email Robert Cartmell Consulting at info@robertcartmell.co.uk to make an enquiry or arrange a discussion.