The Willwriting Partnership

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We write trusts, but can you trust what we write?

What is a trust and why do I need one?

In its simplest form, a trust is an agreement between two or more people regarding the care and distribution of property.

Property is “put in to trust” by a person known as the settlor. The property is then cared for or managed by one or more trustees. At a defined end point, or at various points during the life of the trust, the property is distributed to one or more beneficiaries.

Lets take a simple example:

Suppose Joe gives Bill a pound to go to the shop to buy a pint of milk and bring it back to Mary to make coffee with. A simple trust has been formed here. Joe is the settlor. Bill is the Trustee. Mary is the beneficiary. The pound is the property that has been put in trust. The end point of the trust has been defined as the time when Mary receives the milk.

When a trust is formed, the settlor can empower the trustees with various freedoms and can establish restrictions to those freedoms.

In our milk example, Joe might say that Bill must buy full-fat milk, and if there is no full fat, to buy semi-skimmed, but not to buy skimmed milk. He may give Bill the option to keep the change, or to put the change in the charity box at the shop.

As you can see, a trust is therefore an agreement.

Trusts are formed for many reasons. Some examples relevant to the subject of Wills and family protection, would be:

  • Children receiving money whilst below adult age

(Example: The parent as settlor says that if he or she passes away, leaving children under the age of 18, the children’s uncle is to be the trustee and care for the money until they are 18, but can use it for their education or welfare before that time)

  • Money put in to trust for the benefit of a disabled person

(Example: A parent as settlor says that if he or she passes away whilst still being the legal guardian of the disabled person, their sister shall become the trustee of a certain amount of money which is for the sole benefit of the care of the disabled person)

  • Business trust

(Example: The owner of a company as settlor says that if he or she passes away whilst still having ownership and management of a company, that the company shall be put into trust and run by his business partner. The trustee should sell the company and give the proceeds of sale to the settlor’s spouse)

(Example: A couple own a property but very little other assets. They want to protect the property from probate fees, care fee costs, future family problems etc and so put it into trust, with themselves and their children as trustees)

When considering putting property in to trust, especially money, land, shares, a business, a house etc. care must be taken to establish the correct terms of the trust in order to give the trustees a level of freedom that is appropriate for the purpose.

To discuss what trusts might be applicable to your own circumstances, or to arrange a free consultation, please contact us by phone or by email.

Contact us for a free consultation,
or call 0161 7054382 now.