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Discretionary trusts give greater power to trustees to decide how and when to give funds to beneficiaries. This can be useful for estate planning, and save assets from being depleted unnecessarily.
Our solicitors are experienced at setting up and administering discretionary trusts. Here we’ve answered some common questions about them.
If you’d like to talk to us more about setting up a trust, call us today on 0370 1500 100. Or, use our online form and we’ll call you back.
A discretionary trust gives trustees the power to decide how much beneficiaries get from a trust and when they get it. All capital and income is distributed completely at their discretion.
This means there’s more flexibility and assets can be protected if circumstances change for any reason.
It’s best to write a detailed letter of guidance for the trustees to help them make these decisions in accordance with your wishes.
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You can choose anyone to be a beneficiary. They might be:
It’s possible for people who haven’t yet been born to be beneficiaries – this allows you to plan for future grandchildren and other descendants.
Yes – although in the interests of the trust, it’s good practice to ensure:
Discretionary trusts by their very nature place a lot of power in the hands of the trustees. For this reason it’s important to make sure there’s at least one person in charge who doesn’t have a financial interest in the trust.
Discretionary trusts can be very useful in a number of circumstances. They can be tailored to suit the needs of you and your family, and benefit your estate as a whole.
They are valuable as a way to protect assets for beneficiaries who don’t have the ability to manage their own funds. These might be:
The trustees can make changes to what the beneficiaries get from the trust, as and when it becomes appropriate.
Discretionary trusts can sometimes be used to keep assets away from business creditors or a divorcing spouse.
Discretionary trusts can be a tax-efficient solution when passing on wealth to your beneficiaries, ensuring that:
Discretionary trusts are also valuable when considering how to pass on property. They can help you:
You can set it up during your lifetime, or write it into your Will to come into effect after your death. If you set it up while you’re still alive, be aware that it may be liable for inheritance tax if you die within 7 years.
Any lifetime gift into trust that exceeds the inheritance tax threshold of £325,000 will be taxed at 20%. There may be the opportunity to take advantage of other tax relief – we’ll be able to advise you whether this is the case.
Read more about creating a trust in your Will.
We have considerable experience in both creating and administering trusts. The services we offer include:
We offer a comprehensive service, whatever the purpose or type of your trust.
We can also help with the drafting or rewriting of your Will, and your general wealth planning for the next generation. We’ll make sure the trust fits in with the rest of your plans to keep your estate tax-efficient.
We have a dedicated trust administration team who have considerable experience both setting up and managing trusts. As well as solicitors who are experts in all aspects of estate planning, we also have tax specialists and financial advisers, meaning we have everything you need in-house.
We hold membership of many professional bodies in this area, such as STEP (Society of Trust and Estate Practitioners), CIOT (Chartered Institute of Taxation), and CILEX (Chartered Institute of Legal Executives). We work with these bodies to help shape the law in this fast-moving area.
We have considerable experience in complex estates and frequently work with international and high net worth clients. Whatever your needs, we have the expertise to help you plan effectively.
Call us on 0370 1500 100 or contact us online to learn more about how our solicitors can help you set up and administer a discretionary trust.
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