When it comes to the matter of setting up a trust in Essex, there is a need to consider how they can protect your family. This is because the structures into which you can transfer your assets can have lasting consequences for you and your family. Therefore, it is crucial that you choose the right ones. The reason for this is that right structures can
protect assets and give your family lasting benefits. Consequently, a trust can be used to reduce how much Inheritance Tax your estate will have to pay on your death.

What is a Trust?

A trust, in principle, is a very simple concept. It is a legal arrangement where the ownership of someone’s assets
is transferred to someone else to manage and use to benefit a third person (or group of people). An appropriate trust can be used to reduce how much Inheritance Tax your estate will have to pay on your death.

Broadly speaking, there are two types of trust to choose from: a discretionary trust and bare trust.

(a) Discretionary trusts

A discretionary trust offers flexibility when it comes to deciding who you would like to be the beneficiaries. The appointer can appoint benefits to the beneficiaries of the discretionary trust. With a discretionary trust, there are
possible tax liabilities to be aware of. On creation of the trust, Inheritance Tax might be payable. Inheritance Tax may also become payable if you die within seven years of the creation of the trust. Depending on the value of assets in the trust, there could be further charges to consider during the lifetime of the trust.

(b) Bare trusts

A bare trust ensures that, once named, the beneficiaries cannot be changed or added to in the future. Once a
beneficiary has reached the age of 18, they can ask for the trust to pay their share to them directly. The major advantage of bare trusts over discretionary trusts is that they are classed as potentially exempt transfers with no immediate or ongoing Inheritance Tax charges, provided the creator of the trust survives more than seven years from the date of the transfer.

For more information with regard to the setting up of a trust in Essex as a means of protecting your family’s best interests, contact our dedicated Essex-based staff at Andrew Douglas Wills and Legal Services now via www.andrewdouglaswills.co.uk or on:

01376 348 997

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