A Trust is a way of managing assets (money, land, buildings) for people. There are different types of Trusts and they are all taxed differently. Trusts are set up for a number of reasons, including:
- Control families’ assets
- When someone is too young to handle their affairs
- To pass on assets while still alive
- To pass on assets when you die
It is important to plan for your future and your loved ones future when you pass away. One of the ways to do that is through a Trust. There are many different types of trust and should you need any help and advice on which one would be best for your situation, Jeffrey Mills Solicitors is here to help you with all aspects of Trusts and Estate Planning.
Will Trusts are created in an individuals Will, and only come into effect when the person has passed away.
A Bare Trust is used to pass on assets to young people, the trustees look after them until the beneficiary is old enough. The Beneficiary has a right to the capital and income from a Bare Trust at any time as long as they are over the age of 18 and in the UK. If they are younger than the required age when the trust is set up they will have to wait until they reach the required age.
The beneficiary of a bare trust is responsible for paying tax on the income from it. Transfers into a bare trust may also be exempt from Inheritance tax, as long as the person making the transfer survives for 7 years after the transfer was completed.
Interest in Possession Trust
These are trusts where all the income from the trust must be passed onto the beneficiary as it arises (apart from any expenses), for example, when you die the income will go to your wife, and in the event of her death will pass to your children. This means that your wife has an ‘interest in possession’ in the trust.
On assets transferred into an Interest in Possession Trust before 22nd March 2006 there is no Inheritance Tax to pay. However, for assets transferred after this time Inheritance Tax may be due.
Trustees can make certain decisions about how to use the income from the trust, and sometimes the capital. Discretionary trusts are often set-up to put aside assets for future needs.
The trustee can accumulate income from a trust and add to the trusts capital.
These are a combination of more than one type of trust.
There are many different types of trust, and knowing which one is best for you can be very confusing. Call Jeffrey Mills Solicitors today for help.