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Introduction
A trust is a legally binding way of securing and managing the transfer of assets. This usually means transferring the asset through one of a few different types of trust fund.
A trust ensures that assets are being managed exactly how the the original asset holder (the settlor) intended. Trusts are sometimes used to reduce the value of an estate for the purposes of mitigating Inheritance Tax.
Things to consider
Trusts are set up for a number of reasons. Here are some of the commonest:
– to control and protect family assets
– when someone is too young to handle their affairs
– when someone can’t handle their affairs because they’re incapacitated
– to pass on assets while you’re still alive
– to pass on assets when you die (a ‘will trust’)
– under the rules of inheritance if someone dies without a will (in England and Wales).
Parties involved in a trust
Donor or ‘settlor’
Trusts are usually set up by the settlor who places an initial asset into the trust. Because a trust is founded on a legal contract, it gives responsibility to certain people to take care of the assets.
Trustee(s)
These are usually a set of people chosen by the settlor which could include the settlor him/her self, family members or friends who manage the trust and are legally responsible for the assets. They must make sure they are working within all the conditions set out in the legal document of the trust known as the trust deeds.
Beneficiaries
The individuals or charities which will benefit from the assets or eventual outcome of the trust.
Summary
There are many different types of trust and each holds various benefits depending on your circumstances. To decide on the best trust it will be imperative to speak with a specialist financial advisor.
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Additional Information Resources
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