People are usually nervous about the topic of trusts and are often put off by terms such as “discretionary trust”, “spousal bypass trust” and “pilot trust”. However, a trust is simply an arrangement in which someone transfers assets to one group of people – the trustees – to look after for the benefit of another group of people – the beneficiaries. There are many reasons why a trust structure could be beneficial, and we can advise whether, based on particular circumstances, the trust route is the right one.
One common reason why a trust might be attractive is to retain control over the way beneficiaries use their entitlements. If a given beneficiary is felt to be a bit of a spendthrift, for example, there is no need for him to be given unrestricted access to large sums of cash. The trustees could pay him a regular income instead, or he could be lent capital on a secured basis. Furthermore, a trust is treated as a separate “person” for inheritance tax purposes, which means that it can hold assets that will not be treated as part of the beneficiary’s own estate. This can have important medium to long term inheritance tax saving benefits for future generations.
Trusts need not be complicated and we see it as our job to “demystify” them.