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01-10-2015

Trusts and Trustees

The word “Trust” comes with a number of connotations, most of them inaccurate. There is a general view that Trusts are an expensive hangover from the Victorian age, complicated to administer and a legal concept that is only of interest to the very wealthy.

It is true that Trusts have long been used by the aristocracy (and more recently by entrepreneurs) to hold land and other assets, often to avoid tax in some way. However, there are other, more down to earth reasons for considering a Trust. This can be done in a Will or in a separate Deed if you wish to make what is known as a Lifetime Settlement.

Will Trusts are useful for a number of reasons. Parents often have concerns about leaving money to their children without some strings attached. Given today’s property prices in London, the death of a parent often releases very substantial sums of money. By establishing a Will Trust, a parent can ensure that the child does not have free access to the capital until a designated age. Depending on the child, this can range from ages 21 to 30 – or even older. A modern Trust would give the Trustees very wide discretionary powers to advance capital. This means that the Trustees would be able to make an advanced payment out of the Trust fund, to the beneficiary, for purposes of which they approve, such as providing a deposit on a home or paying university fees.

For parents with children with learning difficulties or a severe physical disability, a Trust is a good way of not only safeguarding the well being of the child after the parent has died, but it can be drafted in such a way that any state benefits to which the child is entitled would not be affected.

Where there are children from more than one marriage involved in an extended family, Trusts can also be a good way of identifying specific assets and ring-fencing these for the benefit of some of the children included in that family. In addition, a Trust can be a useful tool to protect the interests of a child who has married someone whose financial position is less than assured, thereby safeguarding aspects and keeping them away from creditors or a spouse.

Grandparents or other relations may also want to think about establishing Lifetime Settlements for the education and benefit of grandchildren.

Trusts are a remarkably flexible instrument that have been developed in English Law over the years. The language of modern Trusts does not need to be complicated or mysterious. Our specialists can help you set up a Lifetime Settlement Trust or a Will Trust that provides clear and sensible directions to the Trustees and are readily understandable by clients and beneficiaries alike.

Contacts:

Private Client Department

Roger Crouch: r.crouch@fgdlaw.co.uk