Our private client team have an in-depth understanding of the law relating to Trusts and strong commercial acumen. We will take the time to identify what success means to you and work with you and your family to achieve your goals. In addition, we will remain by your side throughout the duration of the Trust, advising the Trustees and Beneficiaries to ensure the Trust is operated correctly.
Experienced, smart, and practical legal advice will ensure your Trust is created and run according to your requirements. Our Private Client team provides specialist advice to clients locally across Wiltshire, Hampshire, and Dorset and throughout England and Wales – from our offices in Salisbury, Fordingbridge, Andover and Amesbury.
To speak to one of our specialist Trusts lawyers, please call FREEPHONE 0800 1404544 or one of our local office numbers [see below] for FREE initial phone advice and an instant no obligation quotation.
What is a Trust?
Trusts involve a person or a company (a Settlor) putting money or assets into a legal entity to be controlled by Trustees according to the directions of the Settlor for the benefit of specific individuals (called Beneficiaries).
Our Solicitors will draft a Trust document and arrange for it to be signed. Before doing so, we will work to understand your situation and advise whether a Trust is the best solution for your circumstances; there are associated taxes and payments that may make it not right for your particular circumstances.
You can be confident we will advise you of any implications and discuss alternative options which may better serve your interests.
Why should I set up a Trust?
There are several reasons for creating this kind of arrangement, including:
· Wealth management and protection – when assets are put into Trusts, you no longer own them. Therefore, provided you set them up correctly, those assets will be protected from creditors. You can also use Trusts to protect property and/or assets from becoming part of the financial settlement upon divorce. However, using a Trust for this purpose requires expert legal advice because the Courts can claw-back assets from a Trust if the other spouse successfully argues assets were put into trust specifically to prevent them from becoming part of a financial settlement.
· Avoiding care home fees – because it is the Trustees who control the Trust capital, those funds are not considered when assessing the family member’s available assets.
· To provide for vulnerable family members – people often create Trusts to ensure family members with physical or mental disabilities are provided for in the future. Because a Trustee manages the property/assets, the Settlor can be confident the assets/income will be distributed in a way they believe protects the Beneficiary’s best interests.
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· To pay for the education of future generations – Trusts can be established to direct income for private schooling and/or university fees of grandchildren or great-grandchildren.
· Tax planning – Trusts can be used as a vehicle to manage how much inheritance tax is paid on your Estate. Using a Trust for this purpose requires expert legal advice, which we will provide quickly and in a practical manner.
· To minimise probate fees
Who owns the property in a trust?
When property and assets are transferred into a Trust fund, they are no longer owned by the Settlor; instead, they are the property of the Trust which is managed by trustees for the benefit of the Beneficiaries.
What are the different types of Trusts?
Our team will take the time to listen to your needs and objectives and advise on a model that best fits. These include
· Bare Trust – also known as a Simple Trust, this enables the beneficiary to gain absolute rights to all the assets contained in the Trust and the income generated from those assets.
· Discretionary Trust – allows the Trustees to make decisions on how the capital/income is distributed to the Beneficiaries. A Discretionary Trust is often used where there is one Beneficiary who has more pressing financial needs than the others, perhaps due to a disability. These vehicles have the significant benefit of being very flexible in providing for a group of beneficiaries, especially where it’s not clear what kind of financial help will be needed in future. The downside is that you lose control over the ultimate destination of the assets.
· Inheritance in possession Trust – the capital is held in Trust, and the income (less expenses) is passed to the Beneficiaries. Unlike a Bare Trust, the Beneficiary cannot access the capital. This is a useful vehicle for ensuring a spouse is provided for following a Settlor’s death whilst preserving the capital for future generations.
· Accumulation Trust – this allows the Trustees to accrue income and add it to the fund’s capital assets.
· Mixed Trust – allows for different types of all the Trusts listed above, in accordance with the tax rules applicable to each.
· Settlor-interested Trust – allows the Settlor or their spouse or civil partner to benefit from the fund. This type of fund can be used to provide for the possibility of the Settlor being unable to work for a period of time.
Do I need a solicitor to create a Trust?
It is very difficult to set up Trusts without a Solicitor and any attempt to do so carries the risk of costly mistakes.
Many people come to us enquiring about putting their family home into Trust to avoid it being used for paying care home fees, unaware that the local authority can challenge a Trust if they believe it was set up for the purpose of avoiding paying for care.
In addition, you may have to pay a charge every ten years after the Trust was created, which might mean that the fund is not financially viable.
What kind of property can be placed into Trust?
Any types of assets can be put into your Trust – the most common of which are property and money.
What is a Personal Injury Trust?
Personal Injury Trusts can be set up to hold the amount of money received from a personal injury compensation payment. It allows the recipient of the compensation to have the compensation money without having to lose their entitlement to other government benefits such as:
· Housing Benefit
· Council Tax Benefit
· Disabled Person’s Tax Credit
· Jobseeker’s Allowance
· Income Support
· Employment and Support Allowance
These benefits are means-tested; therefore, if you have a certain amount of money in your bank account, your entitlement could be reduced or even suspended. Setting up a Trust avoids this problem.
What Legal Duties Do Trustees Have?
You can choose whoever you wish to be your Trustees – perhaps your spouse or partner, or one or more of your children. However it is vital to select the right Trustees.
In administering the fund, each Trustee owes a duty of integrity, good faith, honesty, and loyalty to the Beneficiaries. There should be no conflict between the interests of the Trustees and those of the Beneficiaries.
A Trustee should also have a sound knowledge of not only the Trust property but also the circumstances of the Beneficiaries.
Trustees are charged with the following duties:
· Carry out the instructions of the Trust with care and skill.
· Act impartially regarding the Beneficiaries.
· Provide information and accounts when the Beneficiaries ask for them.
· Preserve the value of the fund’s capital.
· To act unanimously unless the Trust document states otherwise.
Our Solicitors provide smart, practical, expert advice to Trustees, skilfully assisting them with any problems and tackling disputes before they get out of hand.
In addition, Bonallack and Bishop are regularly appointed as professional Trustees ourselves, in cases where the settlor doesn’t feel they have the right person to burden with long-term administration of the Trust.
What can we do if Trustees don’t perform their duties?
A Trustee has a legal duty to act in the best interests of the Trust and its beneficiaries (this is known as a fiduciary duty).
If a Trustee breaches their fiduciary duty, they may be liable for that breach. For example, a breach of trust may occur if a Trustee makes investments in a manner not permitted by Statute or personally benefits from the Trust (when the Trust document does not expressly state they may do so).
The Trustee Act 1925 provides several defences for breach of trust, including that the Trustee “acted honestly and reasonably and ought fairly be excused” for the breach.
A Trustee can be removed by exercising an express power set out in the Trust document, under powers conferred by section 36 of the Trustees Act 1925, or by the Court. If a Trustee loses mental capacity, a method for replacement is provided by section 20 of the Trusts of Land and Appointment of Trustees Act 1996.
How our team can help you
Our Solicitors have years of experience assisting Settlors, Trustees, and Beneficiaries in all matters relating to Trusts – and in acting as Trustees ourselves.
Our team cut through the legal complexities and deliver straightforward, practical advice you can rely on. By instructing us, you can be confident the advice and representation you receive will swiftly resolve any problems you are having.
And if you want to set up a Trust to protect your wealth, we will listen to your ambitions and ensure the vehicle you create achieves those goals.