Will Trusts

Anyone can be a beneficiary. They might be:

• A named individual - the most common type of beneficiary, can include anyone no matter their age or capacity
• A class of people, such as “my grandchildren and their descendants”
• A charity, or a number of charities - this is a common way to support a charitable cause through your Will Trust 
• Any other organisation, such a as a company or sports club.

It’s possible for people who haven’t yet been born to be beneficiaries – this allows you to plan for future grandchildren and other descendants.

Yes – but it’s usually best practice to have at least one non-beneficiary trustee, especially if significant discretions are given to trustees in the terms of the trust.

Key considerations for trustees

There are a few key considerations you need to consider for trustees:

• Permissibility - A trustee can be a beneficiary. This is usually seen in discretionary trusts.
• Conflict of interests - Although common, having a trustee as a beneficiary can lead to conflict of interests. If the trustee is beneficiary, their personal interest in how the assets are distributed might clash with their role as a trustee.
• Legal considerations - You must understand the legal implication of a trustee being a beneficiary and make sure the trust is compliant with all the relevant legal requirements.
• Discretionary powers - In discretionary trusts, the trustee has powers to decide how the trust's income or capital are distributed. This can cause issues if other beneficiaries believe the trustee is favouring themselves. 

Will trusts can be tailored to meet the particular needs of you and your estate. Some uses might include:

• Provide income or property for your second spouse during their lifetime, ensuring the assets then pass to the children from your first marriage after their death
• Fund education for your children and grandchildren
• Provide for vulnerable loved ones.

We’ll be able to advise on the best way to set up a trust to benefit those you want to pass on your wealth to.

Will trusts can be very valuable to effective estate planning. They can help you:

• Minimise inheritance tax and take advantage of available tax relief
• Make sure beneficiaries’ access to benefits or state support isn’t affected by their inheritance
• Protect your assets from creditors or divorcing partners.

They can also help you take advantage of inheritance tax relief due to your partner if they survive you. By planning ahead with a will trust, you can:

• Take advantage of inheritance tax business or agricultural relief, which otherwise might not be available after both you and your spouse have died
• Put assets outside your spouse’s ownership that are expected to increase in value and attract more tax (for example, land with development potential)
• Discount the taxable value of your family home by splitting ownership between a surviving spouse and a trust
• Get extra inheritance tax allowances if either you or your spouse (or both) have previously been widowed.

We’ll be able to advise you on how a will trust can benefit your estate.

There are a number of different types of trusts, each having different benefits and being suited to different situations. Which trust type is right for you depends on:

• Who your beneficiaries are (and whether or not they’re minors)
• Whether you want to specify exactly what each beneficiary gets, or give trustees discretion over this
• What you want to achieve through the trust
• How complex your estate is as a whole, and how the trust will affect other aspects of it for tax purposes.

We work with you to understand your goals in estate planning and offer advice that’s tailored to you and your family. No two estates are the same, and this is true of trusts as well.

This is a complex area but there are several main areas of tax to be aware of when setting up a trust:

Capital gains tax

• Trustees are taxed at the higher rate (in 2018 this is 20% on most assets, 28% on residential property) and they only get half the tax-free annual allowance of individuals
• Transfers from the trust to a beneficiary incur capital gains tax

Income tax

• Beneficiaries pay income tax on any income from the trust
• If beneficiaries have no automatic right to income from the trust, trustees themselves may be subject to more income tax

The tax rules governing will trusts are very complicated, and for this reason it’s essential to have the experts on your side. We can advise you on the best structure for your trust to make sure it’s as tax efficient as possible.

You can write a will trust into your Will, to take effect after you die. There’s is usually a gap between the date of death and when the trust starts up – this is called the ‘period of administration.

Usually this will be a matter of months, although if the estate is particularly complicated and administration takes a long time, it could be years.

We have unsurpassed experience in creating and administrating trusts. The services we offer include:

• Making your trust as tax efficient as possible
• Advising on any legal implications
• Keeping you up to date with relevant changes to tax laws
• Dealing with all aspects of compliance, such as completing the trust register
• Preparing and submitting tax returns
• Assessing ten year and exit charges
• Advising on altering trust structures when appropriate.

We offer a comprehensive service, whatever the purpose or type of your trust.

We have a dedicated trust administration team who have considerable experience both setting up and managing trusts. As well as solicitors who are experts in all aspects of estate planning, we also have tax specialists and financial advisers, meaning we have everything you need in-house.

We hold membership to many professional bodies in this area, such as STEP (Society of Trust and Estate Practitioners), CIOT (Chartered Institute of Taxation), and CILEX (Chartered Institute of Legal Executives). We work with these bodies to help shape the law in this fast-moving area.

We have considerable experience in complex estates and frequently work with international and high net worth clients. Whatever your needs, we have the expertise to help you plan effectively.

We have offices located around the UK. If you can't visit one of our offices, we can meet you at an appropriate location or arrange phone or video calls.

When property is left in a trust in a Will, the management and distribution are determined by the terms listed in the trust document.

The structure of the trust will set out how much control a trustee has over the management of the property.