Trusts


Trusts

Alexander Legal Services works with the SWW Trust Corporation to offer Trust services to our clients.

What is a Trust? 

Trusts have been used by families for centuries to protect wealth.

A trust is a formal transfer of assets (whether they be property, shares or just cash) to a small group of people (usually two or three) known as ‘Trustees’ with instructions that they hold the assets for the benefit of others. If the trust is to be made in your lifetime to take immediate effect, then it is usually evidenced by a trust deed and often referred to as a ‘settlement’. If it is to be created on or shortly after your death then the trust rules must be set out in your Will.

Whether by lifetime settlement or by Will, the trust instrument will state who is responsible for looking after the gifted assets (the Trustees), who is to benefit (the Beneficiaries) and any conditions or rules that the Trustees or Beneficiaries must adhere to. The separation of the legal ownership and beneficial ownership (which were once inseparable) is the unique characteristic of the trust concept. The Trustees are the legal owners but the beneficial owners are the Beneficiaries.

What type of Trusts are available? 

Asset Protection Trusts

Used to ‘ring fence’ assets providing peace of mind that they are protected to provide for chosen beneficiaries.

Asset Protection Trusts are a lifetime settlement used to provide for a surviving spouse and future generations by protecting the assets from third party creditors.

The trust works by transferring the legal ownership of the trust asset to the Trustees for them to hold for the eventual enjoyment of the chosen beneficiaries.

Placing assets into an APT protects them from sideways disinheritance and potential claims upon the divorce or bankruptcy of a beneficiary. Furthermore, probate fees can be mitigated or avoided altogether as the assets within the trust are not treated as part of the estate for probate purposes. An APT also affords protection against any potential claim under the Inheritance Family Provisions legislation following the death of the settlor.

The settlor can transfer assets into an APT whilst continuing to enjoy the use and benefit of the asset for the rest of their life. In the case of the family home, the settlor and their spouse can still retain a right to reside in the trust property. The equity of a property which is subject to a mortgage can be placed within a trust and secured by a restriction against Land Registry title.

In certain circumstances, an APT provides flexibility for the Trustees, at their discretion, to maintain one or more beneficiaries with income or capital depending on their individual needs.

A Flexible Life Interest (FLIT) 

A type of discretionary trust similar in nature to a PPT but with greater flexibility for the trustees and beneficiaries.

A FLIT provides a right of occupation and income to the surviving spouse / partner as Life Tenant, but varies from a PPT by also allowing the trustees to also appoint out capital from the trust at their discretion.

FLIT’s are one of the most commonly used trusts in Wills today because they provide the flexibility to cope with the structure and circumstances surrounding modern families and are able to take into account future changes and the addition of new family members.

A FLIT will:

  • Provide a right of income and capital to a surviving spouse / civil partner. 
  • Preserve Inheritance Tax allowance where a spouse / civil partner is the Life Tenant 
  • Protect the trust asset from third party creditors including potential bankruptcy, divorce settlements and local authority assessment.

Contact us today for a no obligation appointment to discuss making a Trust.