Family Trusts & Asset Protection

Settlor

The person who establishes a trust by putting the assets into it. This is known as ‘settling’ the assets in the trust.

It’s also the job of the settlor to decide who the beneficiaries of a trust will be. The settlor can also place conditions on how the assets in the trust should be managed.

Trustee

A trustee is a person or company that is appointed by the settlor to manage the trust and the assets in the trust.

A settlor can also appoint themselves to be a trustee, but they’ll need to appoint a successor to take over should they pass away.

A trustee must follow the instructions set by the settlor. They must use the trust assets in the beneficiaries’ best interests. If they are a trustee in a discretionary trust, they’ll have more freedom to make decisions.

Beneficiaries

A beneficiary is chosen by the settlor to be the person who benefits from the trust.

They can receive income from trust assets, inherit trust assets when the time is right, or be allowed live in a property that’s part of the trust.

Settlors can be a trustee and beneficiary of their own trusts, and other beneficiaries can be trustees too.

Anyone can be chosen to be a beneficiary of a trust, such as:

• A specifically named individual
• A class of people, such as ‘my grandchildren and their descendants’
• A charity or charities
• Any other body of people, such as a company or sports club.

If a class of people are named as the beneficiaries, it can include people who haven’t yet been born. This allows you to use your trust to help your family for generations.

A trust is a legal arrangement to help individuals manage money or assets that will benefit specific people.

When you have set up a trust, you’ll be able to decide who oversees the trust (the trustee) and who will benefit (the beneficiaries).

Even when assets have been placed in a trust, they can generate income. For example, you can still charge rent for a home that’s been placed in a trust. This income can either be put into the trust or paid to beneficiaries.

Assets can also increase and decrease in value while they’re in the trust. It’s the responsibility of the trustee to manage the asset in the beneficiaries’ best interests.

Trusts do sometimes have to pay tax. It can be more tax-efficient to put assets in a trust for the trustees to choose who should receive the income, depending on beneficiaries’ circumstances.

Many people create trusts to protect assets for loved ones who can’t look after the assets themselves. You might want to protect assets for:

• Young children
• People with serious illnesses or disabilities
• People at risk of unsuitable influences or addictions
• People who are reckless or untrustworthy with their finances.

When you set up your trust, you can leave instructions for how trustees should react if a family member joins or leaves one of these categories.

For example, you might let your descendants have more access to trust assets after a certain age or restrict their access if they behave irresponsibly.

You can also decide how much discretion your trustees have when making decisions like these.

A trust can help you protect assets for other family members as well by reducing the impact of inheritance or income tax.

To set up a lifetime trust, you need to create a trust document that includes all the details about how you want the trust managing. The trust deed should state:

• Who will be the trustees
• Who the trust will benefit
• Which assets will be put into the trust
• How you want the assets to be managed
• How you want benefits to be distributed.

Our expert solicitors can help by advising on these decisions. We can also help you decide the most effective arrangement to best benefit your beneficiaries.

Any assets you own can be put in a trust.

This includes:

• Land and real estate – family homes or agricultural estates
• Personal property – art, jewellery, or other valuable heirlooms
• Financial assets – stocks, money, or shares
• Life insurance – you can make sure your life insurance pays out into a trust.