Mrs N.G. Asks:
What is involved in setting up a Trust and if we do so do we still need a Will?
Peter Sharratt Answers:
The first crucial point I’d like to highlight is that there are many different types of Trust and to cover them all in detail would not be practical. However, I can provide some general information that would apply to the most popular.
There are three parties to a Trust; Settlor/s, Trustees and Beneficiaries. The Settlor/s are the individual/s who create the Trust having decided which Asset or Property they wish to put in to it. The Trustees are the individuals who legally own the Trust Assets/Property. They have the responsibility to administer the Trust for the Beneficiaries. These are the individual/s which it is intended to benefit from the Trust and as such they are the Beneficial Owners. A Beneficiary can be a named person or persons such as ‘my Son Mark 100%’. Or they can be a class of individuals such as ‘my Children equally’.
If you take the first example and had specifically named Mark as the Beneficiary and subsequently had more children they may then not be able to Benefit (depending on the type of Trust). If however you used the second wording any children in future would then automatically become Beneficiaries. If the Trust is used in conjunction with a Life Assurance Policy or an Investment, there will normally be a range of standard Trusts that you can select from and use. Usually you only need to add the details of the Settler, Trustees, and Beneficiaries and then get it signed and witnessed.
A Settlor can be and indeed will usually also be a Trustee but additional Trustees should also be appointed, ideally two more. A Trustee can also be a Beneficiary. The one exception to this is the Settlor; they can be a Trustee but NOT a Beneficiary (unless it is a ‘Settlor-Interested’ Trust which is subject to different tax rules). Being a Trustee is a responsible position and you need to make sure you appoint someone you know and trust. They also need to be in a position to fulfil their Trustee duties and so ideally they should be located in theUK.
Having a Trust does NOT renounce the need for a Will, as the Trust will typically apply to a specific Asset or Property. It is important to note that the Trust will take precedence over the Will so gifting the Asset/Property in the Trust to someone else via the Will will not have any affect.
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Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made.