"Trusts have a reputation as mysterious legal instruments (or financial frameworks) favoured by the rich and used to avoid tax. While wealthy people may use them, their use is much more common than many people might think.
Trusts are no longer effective as means of reducing tax liabilities. The Government brought trust taxation into line with personal and corporate taxation rates so that there is little tax advantage of creating a trust – especially when the cost of administering one is considered. Instead, trusts allow better control over how assets are used and managed.
Trusts (and all they entail) is a vast topic. This concise guide helps you catch up on the vital aspects. Let’s start with the basics…"
"A trustee is someone who is given legal responsibility to hold property in the best interest of or for the benefit of someone else. As the name implies the trustee acts under a trust to do what is best and to act in the interests of others (the beneficiaries) and not himself. The Law has always categorised the relationship of a trustee to a beneficiary as being one of utmost good faith."
"A trust is an arrangement whereby one or more people (known as the trustees) hold property for the benefit of one or more other people (known as the beneficiaries). When the property is money or a collection of assets, it is usually referred to as a trust fund.
Trust powers are what you say your trustees can do or must do. Powers can be as wide ranging or as narrow as you want, but be careful to make sure that what you ask can be done. If it turns out that the trustees cannot do as you ask, then they may have no alternative than to ask a judge, and spend trust money on legal fees"
"The only certain things in life are death and taxes', so let us make clear that there is no magic bullet to save tax.
Some advisers on wills may try to persuade you to enter into one of the tax schemes you see advertised in the newspapers. They may be paid commission when you join. We can say that any scheme to save tax is risky in that:
Having said that, there are some ways of writing your will so that you are likely to pay less tax.
A nil rate band discretionary trust as used before October 2007, is now ineffective to save tax. However, it can still be useful to use a discretionary trust. Here are some advantages you might like to consider:
Of course, there are many possible reasons to use a trust that are unrelated to saving tax. If you want a trust anyway, the above points count as a possible bonus and the points below may be unimportant."
"A life interest is exactly that, a beneficial interest during a lifetime, but not ownership.
To create a life interest, property is transferred to trustees who hold it according to the instructions contained in the trust deed (in this case, your will) during the life of the beneficiary.
Your will also says what you want to happen after the life beneficiary dies. That later gift is called a gift over and the people who receive it are known as the remaindermen."
"Creating a property protection trust (sometimes called an asset protection trust) through your will allows someone to benefit from your estate after you have died as if he or she owned the assets, without actually inheriting it. The value of his or her estate is therefore kept minimised.
In law, there is no such thing as a property protection trust. The mechanism is a standard trust where a beneficiary has a life interest. The name is used in marketing, presumably because the idea of “protecting” your assets from the state is appealing enough to want to pay higher fees for the writing of “special” terms into your will by a professional."
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