Trusts play a crucial role in estate planning by safeguarding assets, managing tax obligations, and ensuring beneficiaries receive their inheritance according to specific wishes. At Kings Court Trust, we have extensive experience in estate administration, helping families navigate the complexities of these legal structures after death. This blog provides an overview of common Trusts and their implications.
A Trust is a legal arrangement in which assets are placed under the control of Trustees for the benefit of designated beneficiaries. Trustees have a fiduciary duty to manage these assets responsibly. Trusts can be established through a Will or created during a person’s lifetime to achieve various estate planning goals.
To ensure it is clear that a property is held under a Trust, the Land Registry should be updated to reflect the Trustees as legal owners.
Trustees may be guided by a Letter of Wishes, though this is not legally binding, and they must act in the best interests of all beneficiaries.
A Life Interest Trust, also known as an Interest in Possession Trust, allows a named beneficiary to receive income from Trust assets or reside in a property for their lifetime. The underlying capital remains protected and is passed to other beneficiaries upon their death.
For example, a surviving spouse may continue living in the family home, but ownership ultimately transfers to the children. This type of Trust balances the immediate needs of a spouse while securing the inheritance for future generations.
Nil Rate Band Discretionary Trusts were commonly used to help mitigate Inheritance Tax liabilities. While legislative changes have reduced their necessity in many cases, they can still be useful in specific circumstances, particularly for tax planning or asset protection. These Trusts can be drafted to allow up to the maximum nil rate band amount, including transferable allowances, to be placed into a discretionary structure, potentially reducing the overall Inheritance Tax burden on an estate.
When minors inherit assets, a Trust is typically established to manage these funds until they reach a specified age. Trustees oversee the assets and may distribute funds for essential needs, such as education and living expenses.
Key considerations include:
These Trusts are designed to provide financial support to individuals who may struggle to manage money due to disability or vulnerability. They offer tax benefits while ensuring that funds are used appropriately for the beneficiary’s care, often without affecting eligibility for state benefits.
Choosing the right Trustees is particularly important in these cases to ensure the beneficiary’s best interests are protected and legal requirements are met.
Many Trusts must be registered with HMRC under the Trust Registration Service (TRS), which was introduced to enhance transparency and comply with anti-money laundering regulations.
Trustees have the responsibility to:
Failing to register a Trust may result in penalties, making compliance essential.
At Kings Court Trust, we specialise in estate administration, which includes ensuring that Trusts are set up correctly and assets are transferred in the Trustees' name. Our expert team provides clear guidance to help families understand their responsibilities and ensure Trusts are administered correctly.
For estate planning services, please contact a Financial Adviser, who will be able to help establish if a Trust could help mitigate future tax burdens on your loved ones. If you are unsure about who to pick, get in touch and we will be happy to connect you to one our trusted partners.
If you require assistance with estate administration, contact our team at 0300 303 9000 or fill in the form below for an informal discussion on how we can help.