Setting up a Trust

Trusts are extremely flexible ownership vehicles and are commonly used in estate and tax planning. When used properly, taking expert advice into account, trusts are a hugely useful tool for effective wealth and succession planning.

You can set up a trust to help protect and control your wealth in a flexible ownership structure. Trusts can be used for multiple reasons, including:

• Holding assets for children until they reach an age where they are financially responsible and can manage the assets
• Managing assets for vulnerable or improvident family members
• Providing a flexible structure for multiple beneficiaries, for example, for grandparents to help with grandchildren’s school fees
• Providing asset protection from claims on divorce, by creditors or from legal rights to inheritance
• Passing assets tax-efficiently to the next generation

Trusts are often used as a form of asset protection or as part of a personally tailored tax planning strategy. Assets placed in a trust may in certain circumstances not form part of an individual’s estate on death, helping to mitigate the impact of inheritance tax (IHT). They may also be used to partially alleviate the effect of capital gains tax on the gift of assets.

There are different types of trusts available depending on your personal circumstances and objectives. Our trusts’ specialists  recommend seeking specialist help to decide which trust – or trusts – will be best suited to your needs. An expert will be able to help you ensure that the trust deed is drafted in a way which provides maximum flexibility to respond to changing family circumstances and future changes in tax legislation.

Speak to our trust solicitors today

To discuss the process of setting up atrust with a member of our expert team, please get in touch today.

Contact us on 0131 270 7700, visit our offices in Edinburgh, Glasgow, East Lothian, Shetland or Orkney, or fill in our enquiry form to request a call back.

What is a trust?

A trust is a legal arrangement which allows a third party (known as a trustee) to hold your assets on behalf of a separate beneficiary. Once a trust is established, the trustees will have the responsibility of administering the assets set out in the trust in the best interests of the beneficiary.

There are various reasons why someone may choose to set up a trust, including:

• To have greater control over family assets
• When a beneficiary is too young to handle their affairs or manage certain assets
• To protect vulnerable family members
• To reduce inheritance tax

What are the benefits of setting up a trust?

There are numerous benefits to setting up a trust. While the exact advantages will likely depend on your individual circumstances and the assets held in the trust, a  trust could, for example:

• Protect family wealth for future generations
• Provide support to someone who cannot manage their affairs (such as a child or someone with a disability)
• Avoid the need for a Grant of confirmation (Probate in England)
• Reduce and/or postpone inheritance tax and other tax bills

It’s also important to note that there are a range of different trusts available, which means that you can take the time to select one which is best suited to your personal circumstances, the assets you wish to transfer, the beneficiaries of the trust and how and when you wish them to benefit.

Our trust set-up expertise

Guiding you through the process of setting up a trust

While the process of setting up a trust is relatively straightforward, it’s not something that should be done without plenty of forethought and careful consideration. Placing assets into a trust is a very important decision, which means you need to be certain you are making the right choices and have the right trust(s) set up to meet your objectives.

Our trust experts can work alongside you, guiding you through all the necessary steps that need to be taken while setting up a trust, including identifying the assets that need to be placed in the trust and the exact terms that you would like to be incorporated.

Advising on the most appropriate trust

There isn’t a ‘one-size fits all’ type of trust that can be used to suit all circumstances. Rather, there are a range of different types of trusts, all of which serve various different purposes, the terms of which can be tailored to your personal needs.

The main types of trusts you may wish to create include:

• Bare trusts – Also known as a simple trust, a bare trust is used to hold assets, typically on behalf of younger beneficiaries, until they reach an appropriate age. In Scotland, a beneficiary can access such a trust when they’re 16.
• Interest in possession – Beneficiaries of an interest in possession trust have the right to receive the trust’s net income immediately and to use the trust’s assets, for instance, living in a property held by the trust.
• Discretionary trust – The arrangements for a discretionary trust grant the trustees the power to deal with the assets in the trust and distribute income to beneficiaries however they see fit. A letter of wishes is often put in place at the time of the trust set-up to provide the trustees with guidance as to how to hold and apply the assets.
• Charitable trusts – This provides a tax-efficient method for charitable giving. The beneficiaries for this trust, as the name would suggest, much be charities.
• Will trusts – This is a type of trust which only operates on the settlor’s death and is established under the terms of a will or during the settlor’s lifetime remaining dormant until their death.

Tax  advice

ITrusts can be an effective method of benefiting future generations in a tax efficient way. Our trust experts can work with you to establish how to set up a trust that minimises your tax liability(including in relation to Capital Gains Tax and inheritance tax). Our tax compliance team can also deal with any reporting requirements arising from the set-up of the trust, during its lifetime and on its winding-up.

Why choose Anderson Strathern’s trust experts?

With Law Society of Scotland accredited specialists in trust law and 13 members of the Society of Trust and Estate Practitioners (STEP), our trusts team is one of the largest in Scotland and is vastly experienced in all areas of trust law. We can assist with identifying the most appropriate trust structure and put in place comprehensive and flexible documentation to meet your objectives and ensure that the trustees are given sufficient powers to carry out their roles effectively.

We can assist with ongoing trust management, administering trust assets, trust tax planning and compliance advice, providing investment advice, where appropriate, through Anderson Strathern Asset Management, advising on payments from the trust fund, coordinating trustee meetings and providing guidance and support to trustees and beneficiaries about their rights and duties.

Speak to our trust solicitors today

To discuss the process of setting up a  trust with a member of our expert team, please get in touch today.

Contact us on 0131 270 7700, visit our offices in Edinburgh, Glasgow, East Lothian, Shetland or Orkney, or fill in our enquiry form to request a call back.