An introduction to family UK trusts

The purpose of a trust

Trusts offer a means of holding and managing money or property for people who may not be ready or able to manage it for themselves. Trusts can also sometimes offer a way to protect your assets such as your home. Used in conjunction with a Will, they can also help ensure that your assets are passed on in accordance with your wishes after you die.

How does a trust work?

A Trust is an obligation binding a person called a Trustee to deal with assets or property in a particular way for the benefit of one or more 'beneficiaries'.

Who creates a trust?

The person creating the Trust is known as the “Settlor” and is the person who puts property or assets into the Trust at the start, often adding more later. The settlor says in the trust deed how the trust's property and income should be used.

What is a trustee?

Trustees are the 'legal owners' of the trust property and must deal with it in the way set out in the Trust deed. They also administer the Trust. There can be one or more Trustees. 

What is a beneficiary

This is anyone who benefits from the  property held in the Trust. The Trust deed may name the beneficiaries individually or define a class of beneficiary, such as the settlor's family.

Trust property

This is the property or assets or capital that is put into the Trust by the Settlor. it can be anything, including land or buildings, investments, money, antiques or other valuable property

Examples of when a trust might be created:

1. Minor Beneficiary Trust
   When someone's too young to handle their affairs

2. Discretionary Trust
   When someone can't handle their affairs because they're incapacitated or to control the inheritance of a wayward beneficiary (drugs,drink dependancy) Lifetime Trust- to pass on money or property while you're still alive usually as part of iht planning

3. Property Trust
   To protect your childrens’ inheritance or to provide a home for someone when you die

4. Annuity Trust
   To ensure maintenance payments are maintained (legal requirement) for children possibly from a previous relationship

5. Beach Bum Trust
   To manage the inheritance of wayward children!! Deed Of Variation – with Discretionary Trust for IHT saving when someone dies without leaving a Will (england and wales only)

6. Protective Trust
   A bespoke Trust for when there are special considerations that need to be included

Last updated - Tue, 9 Mar 2010