Trusts for Individuals

Providing experienced advice with regard to the formation and administration of trusts, helping you utilise the benefits to protect yourself and your family

What is a trust?

A trust is created when a person (the settlor) transfers assets such as shares, property or cash to trustees, for them to administer for the benefit of the settlor’s chosen beneficiaries.

A trust can be established by deed during the settlor’s lifetime, or by the terms of a will, to take effect on the settlor’s death.

Trusts can be used as a vehicle to tax efficiently transfer assets to others, or to protect assets, both from otherwise punitive tax measures and from third party claims.

A trust can provide various tax and practical benefits:

  • Tax savings

In certain circumstances, a trust can provide significant income tax savings, for example:

Mr 'X' is a higher rate taxpayer. He wishes to make a gift of an investment property to his three grandchildren and decides to settle it on a discretionary trust. The property produces a rental income of £10,000 per annum.

Mr 'X' would normally pay tax on the income at the rate of 40%. The trustees will instead pay tax at 45% on most of the income.

However, if an appropriate amount of the net trust income is distributed to the grandchildren, and they have sufficient unused personal allowances, they will be able to recover all of the tax paid by the trustees (a tax saving for Mr 'X' and his family of £4,000 per annum)

  • Control

A trust will enable you to gift valuable assets (as part of your inheritance tax planning) without losing control of the assets

  • Protection

Assets held in trust are protected to a greater extent from the claims of creditors in bankruptcy or divorce

  • Flexibility

You can allocate the income/capital of the trust as you wish.

The rules that apply to trusts are complex and it is important that you seek advice before setting one up.  

Different because you are

We pride ourselves in providing individually tailored services to our clients. Whatever your aspirations and priorities in business and life, we will be by your side with expert advice from local specialists. It is because your needs are unique, that the solutions we provide are distinct and personalised to you.

We have a great deal of experience when it comes to the set-up and management of trusts, and can help you find the right legal advice and help with all aspects of the tax planning and ongoing administration. 

FAQs

How easy is it to change accountants?

It is generally very straightforward to move to Lovewell Blake from another accountant. We will write to your previous adviser for professional clearance and also obtain copies of selected historic information such as last years accounts and tax references. We will then issue a letter of engagement and register as your tax agent direct with HMRC.

What should I look for in a Financial Adviser?

It is important when looking for a Financial Adviser that you take your time to find someone who understands your needs and can work with you to design a bespoke solution to your specific requirements. Make sure that you have full market access as many firms will limit your investment prospects to their own funds. Your adviser should be experienced and registered with the FCA. At Lovewell Blake Financial Planning we have a team of highly experienced consultants who get to you you and your requirements and have access to the whole market of financial products.

What is a Trust and how does it work?

A trust is an arrangement where assets can be held on behalf of someone else. The settlor creates the trust and transfers assets into it. The assets are held in the Trust for the ultimate benefit of the beneficiaries. Beneficiaries are commonly young children or family members. Trusts are managed by Trustees, who can be the settlor, other family members or professional advisers such as accountants.

Trusts can be a very tax efficient way of reducing exposure to some wealth taxes such as inheritance tax when structured under a comprehensive tax planning arrangement. Trusts are also commonly used to 'park' assets and control the time at which the beneficiary has full entitlement to the asset. Professional advice is absolutely critical if you are considering the use of Trusts. Speak to one of our specialists or get in touch.

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