Trusts

• Bare trusts: These are basic trusts where the beneficiary has absolute right to the assets once they are over 18.
• Interest in possession trusts: This kind of trust means that the beneficiary has an absolute right to receive income from the trust. For example, if money was placed into an interest in possession trust, the trustees would send all of the interest straight to the beneficiary.
• Discretionary trusts: This is a flexible type of trust. Usually, a settlor decides when and how much of the assets in a trust are passed on to a beneficiary. However, with a discretionary trust it is the trustee instead who makes these decisions. This can be a useful way of protecting the assets in situations such as when the beneficiary is a child or if the beneficiary went through a divorce.
• Accumulation trusts: These trusts allow trustees to grow the income of the trust and add it back into the trust. Like a discretionary trust, the trustees may also be able to pay the beneficiaries an income from the trust.
• Mixed trusts: A mixed trust combines one or more types of trusts, meaning that the different types of rules will apply to each part of the trust.
• Settlor-interested trusts: With this kind of trust, the trustees can make payments from the trust to the settlor or their spouse or civil partner. This is useful for people who can no longer work due to illness, for example.
• Non-resident trusts: This is a trust where either the trustees do not live in the UK or the settlor did not live in the UK when they set up the fund.

If you’re a settlor, assets in a trust do not have to be considered as part of your estate. This can make probate a little easier (find out more about the probate process here) and also be beneficial for your inheritance tax.

Trusts are also private, meaning the details of which assets you pass on to whom will not be made public (unlike a will that is made a part of public record).

Trusts are a very useful tool for controlling and protecting your assets and the way you pass them on, whether that’s in your lifetime or after your death. They can be especially useful for passing on assets to children who might not yet be ready to look after the asset, or ensuring that if a beneficiary ever divorced or ran into debt, the asset would remain protected for their benefit alone.

Often people want to appoint trustees they trust such as family members or close friends. It’s also important to consider whether the person is capable of dealing with the responsibility and administration of a trust.

You can appoint a professional trustee (meaning a business such as Countrywide Tax and Trust). This allows you to benefit from their expertise in the running of the trust. You can appoint multiple trustees and a professional trustee can work alongside friends or family that you also choose for the role.

A professional trustee can help to avoid any risk should friends and family members argue over the running of a trust. Plus, they are able to act in a completely impartial and fair way when distributing or taking care of assets for beneficiaries.