Trust Formation and Administration
Frequently asked questions
What is a trust?
A trust is a way for an individual (the settlor) to give property or assets to a person or group of people called beneficiaries in a way that retains more control than an outright gift.
Why set up a trust?
The main motivation is a desire to retain some control over the assets put into the trust.
Are there any other benefits?
Trusts can be used to save Capital Gains Tax, Inheritance Tax and Income Tax. A personal injury trust can be used to protect state benefits when an award of compensation has been made.
As settlor, can I also be a trustee?
Yes, or you could appoint professional trustees such as solicitors or accountants.
As settlor, can I also be a beneficiary?
Yes, but you will not obtain some or all of the potential tax savings, unless the trust you are creating is a personal injury trust.
Can I set up a trust with the compensation I am to receive for my personal injury?
Yes, and this will also mean that you have the right to retain any state benefit you currently receive or may be entitled to receive in the future.
If I put my compensation for personal injury into a personal injury trust, can I still spend the money?
Yes, although this will be subject to the Trustees' discretion to ensure that your state benefits remain protected.
Are there any restrictions on the type of asset that a trust can hold?
The investment powers of a trust can be written to be as wide or as narrow as the settlor wishes, but a trust cannot hold tax-free products such as an ISA.