Setting Up a Trust
Setting up a trust is a safe and useful way of allowing someone to manage your money or assets for you, according to the requirements that you set out – whether it’s to financially help your child at a certain age (for example, when they turn 18), or to pay for your own healthcare at an older age.
It’s important that you protect your estate (money, property, possessions etc.) by placing it in an appropriate trust in order for it to be used for whatever reasons you choose.
What is a trust?
A trust is a legal arrangement where one or more individuals that you pick, called the trustee(s), manage the money or assets that you have set aside for someone else (the beneficiary). This is usually a child, but the beneficiary can be anyone you choose.
The trustee can be a spouse, family member, friend, company or solicitor firm, depending on your personal situation and needs.
The person who wants to set up the trust and owns the trust property (money, assets, etc.) is called the settlor, who determines a specific reason for that property to be used in order to aid the beneficiaries. For example, when their son turns 18, they may want a certain amount of money to go to him.
Trusts secure the settlor’s assets and ensure that the trustee abides by the settlor’s requirements of using the estate inside the trust. Legally, the trustee cannot use the money or property for any reason other than your wishes.
So, for example, you could place money in a trust to pay for your healthcare when you reach a certain age, or to provide financial support for a child when they reach a certain age.
Who are beneficiaries?
The beneficiaries are the people who benefit from the trust – so that could be you if you pay for your own care, it could be your children if you use the trust to provide financial support for them, and so on.
The trustees (e.g. solicitor or spouse) manage your trust, so beneficiaries can only access the trust property when the circumstances allow – you set these out at the time of opening the trust.
What can I place in a trust?
You can put things like money, investments, property, or any other asset that would be of use to the beneficiary in your trust. However, depending on the type of trust that you opt for, you may have to pay tax, and the trustees might need to complete tax returns.
Our partner solicitors are available and more than happy to help you understand exactly what a trust involves, so be sure to give us a call if you are left confused about the process at all.
How to choose your trustees
A nominated trustee is chosen by you (the settlor) and manages the trust on behalf of you and the beneficiary.
The trustee is responsible for distributing the income of the trust and releasing the assets in accordance with your wishes.
Trustees can be family members or close friends, but this could cause problems and a conflict of interest in some cases. Be aware that if you choose a friend or family member, they can access the trust money, and in some (rarer) cases, trustees might use the money (or possessions, etc.) for the wrong reasons – legally, they cannot do this. They must only use it according to your stated requests.
An inexperienced trustee could also put your assets in danger of losing value, so most people tend to opt to have solicitors as their trustees due to their experience and expertise.
Our partnered reliable and professional solicitors are here to help you set up a trust today, working on your behalf to provide support for the beneficiary, in line with the requirements set out by you.
Why set up a trust?
The trust will essentially hold your assets on behalf of the beneficiary, rather than you giving it directly to them. This protects it from several costs and dangers.
If you don’t use a trust and, instead, you give money directly to someone, you can never be sure that the asset will be used for the purpose you intended.
As well as that, your assets are protected from other costs or potential problems if they are placed in a trust, including care home fees, taxes, bankruptcy claims, divorce settlements, any future marriages and so on.
The wording and legal terms used in your trust are crucial in ensuring that it works exactly how you want it to. By using us, you will be guided through every step of the process and have everything explained clearly, and we can guarantee that your wishes will be carried out exactly how you want them to be.
When would I use a trust?
The most common reasons for using a trust are:
- To support someone who might struggle to manage money themselves (such as children or someone with mental or physical conditions)
- To ensure that a sum of your money is used to look after yourself (if you become ill through dementia, for example)
Whether it’s financial support for your children, for someone in your family with a disability, or even for yourself should you fall ill, trusts can provide genuine peace of mind.
So, instead of simply handing a friend some money and telling them to only use ‘X’ amount to pay for your care if you become ill, and ‘Y’ amount to give to your children when they turn 18, you can hold it in a formal trust where it is protected, and you can guarantee that the intended purpose will be fulfilled.
Types of trusts
There are several types of trusts, but two of the basic types are known as ‘revocable trusts’ and ‘irrevocable trusts’.
As the names suggests, ‘revocable trusts’ can be altered, modified or even revoked completely, and ‘irrevocable trusts’ are contracts which cannot be changed or revoked in any way after the policy has been set.
Both have varying pros and cons, but having a consultation with a member of our team will give you a clear idea of which type of trust is most suitable for your situation.
As well as these two primary trusts, there are also many other types, including:
- Bare trusts
- Interest in possession trusts
- Discretionary trusts
- Accumulation trusts
- Mixed trusts
- Settlor-interested trusts
- Non-resident trusts
Don’t worry about knowing the difference between all these different types of trusts, as our partner solicitors are on-hand to provide you with individual support in order to create the most suitable trust for your specific needs and situation.
How to set up a trust with Quick Wills
At Quick wills, the strong relationships we have with our reputable partners mean we can provide you with the correct advice at a reasonable cost, with a straightforward process along the way.
You can start setting up your trust today by using our experienced partner solicitors who provide a professional and reliable service that you and your beneficiaries can depend on.
Our UK-based solicitors give each client a personal and detailed consultation, answering any questions you may have and developing the best trust for you and your beneficiaries.
Simply give us a call or complete our short contact form and we will get back to you at a time that suits you.Get in touch