Banner Image

Trust, Wills and Probate

What is a Trust?

A trust comes into effect when a ‘settlor’ places money, land or other assets in the hands of trustees. The trustees are the legal owners of the property but are obliged to hold and manage the property for the benefit of a person or a group of people, who are called beneficiaries.

There are several types of trust:

Bare Trust
In this type of trust, sometimes called a ‘Simple Trust’, the beneficiary has an immediate and absolute right to the property in the trust. The trustees have no discretion as to how the fund is managed. They must manage the trust assets for the maximum benefit of the beneficiary. The income of these funds is taxed as if it is the income of the beneficiary. Parents or grandparents can be trustees of a Bare Trust for their children or grandchildren.

Discretionary Trust
Here the trustees have discretion over to whom and when payments should be made and also whether conditions should be attached. They are usually given discretion as to the investment of the fund. This type of fund may or may not be allowed to accumulate income. Discretionary Trusts are often used when there are worries that a beneficiary may act irresponsibly if given assets outright.

Accumulation and Maintenance Trust (A&M)
In an A&M Trust, the settlor places money in trust for children/grandchildren until they reach a specified age (maximum age 25), when they become entitled to the trust fund. A&M Trusts are used to provide financial support for younger family members. Until 2006, they had favourable tax treatment, but they are now less ‘tax friendly’.

Interest in Possession Trust (IIP)
Here, the beneficiary has a right to the income but not the capital of the trust fund. For example, a beneficiary may be allowed to receive the income arising from shares during their lifetime, with the shares going to their children on their death.

View my profile
    • 01606 48777
    • View profile
Trusts can be used for many purposes and different types vary in their governance and tax treatment. Trusts can be a very effective way of protecting family wealth. Contact us for assistance in forming your wealth protection plans.

For more information or to speak to one of our experts, please call us on 01606 48777

Get in touch

  • "Extremely fair, understanding, caring and knowledgeable in all aspects of family law."

    Mr P
  • "Amazing attitude and caring towards its customers in life's most stressful situations."

    Anonymous
  • "Highly recommend the conveyancing services. Extremely satisfied with the overall level of service provided - kept me informed at every stage, providing good information and advice."

    Heather Woolley
  • "Excellent efficient will-writing service from very friendly staff. Everything explained to us so that we understood it. Fantastic!"

    Jane Imisson
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.