sm124 - Flipbook - Page 9
TRUSTS
Passing on wealth
through trusts
Is it the right moment to begin safeguarding your wealth for the future?
A UK trust is a legal arrangement in which one party holds and
manages assets on behalf of another party, in accordance with the terms
set by the trust’s creator.
WHEN OUTRIGHT GIFTS
AREN’T THE RIGHT FIT
Sometimes, giving money directly isn’t the best
option. A trust enables you to retain control over your
assets even after transferring them. You may prefer to
distribute funds gradually or tie the disbursement to
speci昀椀c milestones, such as paying university fees or
contributing to a house deposit.
Some families also use trusts when one or more
bene昀椀ciaries might struggle to manage money due
to personal challenges or incapacities. By structuring
the trust carefully, it’s possible to ensure that funds
are protected and distributed to support the intended
recipient at the right time.
A MEANS TO PROTECT WEALTH
Family dynamics and external in昀氀uences can
sometimes jeopardise 昀椀nancial security. For
instance, a bene昀椀ciary might lead a high-risk
lifestyle or be swayed by an unreliable partner.
A trust acts as a safeguard, imposing conditions
hey often serve as a safeguard for
T
over time or safeguard wealth for bene昀椀ciaries who
on how and when wealth can be accessed whilst
may face di昀케culties, such as being too young,
providing protection through agreements set out by
on to the next generation according to
lacking 昀椀nancial knowledge or encountering external
the settlor.
speci昀椀c wishes. Trusts are essential in
risks like unstable personal relationships.
estate planning; however, due to their complexity,
For some, using a trust re昀氀ects broader family
obtaining professional advice before setting one up
strategies, such as safeguarding assets against
funds bene昀椀t chosen causes for many years to come,
is vital.
speci昀椀c risks like gambling issues or external
rather than just a one-time donation. t
wealth, ensuring that assets are passed
Charitable trusts are another option for those
wishing to leave a lasting legacy. They ensure that
in昀氀uences. Additionally, in jurisdictions where tax
WHY CONSIDER A TRUST?
laws di昀昀er, trusts can have varying tax implications,
Imagine you want to leave your estate to your
making expert advice essential for e昀昀ective planning.
grandchildren, but they are still young adults. Would
they handle sudden 昀椀nancial freedom responsibly,
DEFINING A TRUST
or might they lack foresight and spend it unwisely?
At its core, a trust creates a legal relationship among
Alternatively, you may have nieces and nephews, but
three parties. The ‘settlor’ transfers their assets into
you’re unsure how to distribute your wealth fairly.
a trust and speci昀椀es their wishes. The ‘trustee’,
A trust helps address concerns like these
often a professional like a lawyer, manages the trust
by allowing you to decide how and when your
according to these instructions. Lastly, there is the
bene昀椀ciaries access their inheritance. Whether it’s
‘bene昀椀ciary’, who receives the trust’s assets at the
providing for education, managing wealth for those
appropriate time and for its intended purpose.
who cannot handle large sums or supporting future
Choosing a trustee is a crucial decision
generations, trusts o昀昀er customisable solutions to
because they must act in the best interests of
suit individual circumstances.
the bene昀椀ciaries. This often involves overseeing
Time to trust
in your future?
If you’re considering a trust as part of
your estate planning, professional advice
is essential to help you make informed
decisions and set up your trust properly.
For expert guidance and additional
support, contact us today and start
safeguarding your wealth for the future.
This article does not constitute tax, legal or 昀椀nancial
complex 昀椀nancial matters and managing practical
advice and should not be relied upon as such. Tax treatment
THE MANY FORMS
responsibilities. Professional trustees bring
depends on the individual circumstances of each client and
AND PURPOSES OF TRUSTS
neutrality and expertise to the role, ensuring the
may be subject to change in the future. For guidance, seek
Trusts have been utilised for centuries and serve
trust operates smoothly and accurately re昀氀ects the
professional advice. The Financial Conduct Authority does
various functions. They can distribute gifts gradually
settlor’s intentions.
not regulate estate planning, tax advice or trusts.
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