A trust is a way of managing assets such as land, buildings, money or investments for people. Trusts can be set up in a person’s lifetime. They can also arise on death under the terms of a Will or, if there is no Will, under the intestacy rules if any beneficiary is under 18 years of age.There are different types of trusts and they are all taxed differently.
the person who puts assets into a trust - the ‘settlor’
the person who manages the trust - the ‘trustee’
the person who benefits from the trust - the ‘beneficiary’
What trusts are for
to control and protect family assets
when someone is too young to handle their affairs
when someone cannot handle their affairs because they are incapacitated
to pass on assets while you are still alive
to pass on assets when you die (a ‘Will Trust’)
What the settlor does
deal with the assets according to the settlor’s wishes, as set out in the trust deed or their will
manage the trust on a day-to-day basis and pay any tax due
decide how to invest or use the trust’s assets
If the trustees change, the trust can still continue, but there always has to be at least one trustee.
the income of a trust only, for example from renting out a house held in a trust
the capital only, for example getting shares held in a trust when they reach a certain age
both the income and capital of the trust
There are many types of trust to suit all circumstances.