Trusts

What is a 'trust'?

A trust is an obligation binding a person (which can be an individual or a company) called a 'trustee' to deal with 'property' in a particular way, for the benefit of one or more 'beneficiaries'.

Trusts can be used in many different situations to protect your family, and can be used with Wills, property, insurance policies and business assets.

Wills

Abbey Wills will be able to help you with general estate planning by making Wills for you and incorporating the use of Trusts to mitigate inheritance tax.

Trusts will also make sure that your hard earned assets are kept within your bloodline children and not lost to re-marriage or divorce by members of your bloodline family.

Property – Can I avoid losing my house to care home fees?

The answer is yes with the correct type of planning. The use of a Trust is the solution, either one that is set up on the death of the first one of you, (for couples), or by setting up a Trust in your lifetime, (for single people and couples).

We will make an assessment once we have discussed with you the value of your entire estate, and then we will make our recommendations as to the number and type of Trusts to be used. A Trust or Trusts will also mitigate inheritance tax.

Can Trusts Reduce Or Eliminate The Tax I Pay?

Many people now look to using Trusts as a means of mitigating tax which would otherwise be payable.

There are four types of tax which could affect you and your estate:

• Corporation Tax
• Capital Gains Tax
• Inheritance Tax
• Income Tax

So whether you own your own business and your concern is Corporation Tax, you may own property or hold other forms of assets which would fall prey to Capital Gains Tax, or believe Inheritance Tax will become an issue for your intended beneficiaries, a Trust could be the answer.

The main two trusts used are:

• Discretionary
• Interest In possession

Example: Parents provide a house deposit for their children

This is one example of the use of a Trust. You as a parent give your son / daughter a deposit for them to buy a house, typically £50,000. Your son / daughter lives with their partner but after 3 years they decide to split up and sell the house.

This money is now venerable and you may not get it back or you may not get it all back.

The solution is to create a Trust and put the £50,000 into it, and then the Trust gifts the money to your son / daughter. Now if the situation described above occurs, upon sale of the property, £50,000 will be paid back to the Trust and your money is safe.

Insurance Policy

Putting an insurance policy into a Trust is an exceptionally good and speedy way of getting money to your family after your death, without the need for probate.

As the money will be paid into a Trust, it will not form part of your estate; therefore it is free from inheritance tax.

Abbey Financial Services, our associate company can provide you with the correct type of tax planning to ensure as much tax as possible is saved. We will help you with matters relating to your business, property ownership and buy to let properties, where taxation can be legitimately avoided by the use of Trusts.

There are many other situations where the use of Trusts can protect your assets and money, and can mitigate tax which would otherwise be paid.

Abbey Financial Services is an Appointed Representative of Personal Touch Financial Services Limited which is authorised and regulated by the Financial Services Authority