February 6th 2023
The cost of creating a simple trust is usually in the region of £1000 - £1,500. The exact amount depends on how much legal advice you need and how long it takes your solicitor to draft the very precise wording.
If you come to your Trust Solicitor with a good understanding of the important information you need to set up your trust, the cost of the initial legal advice can often be significantly reduced. This information includes:
If your case is very complex, like if you have a vast collection of assets and/or business interests or any foreign assets that will require tax planning, the cost can be as high as £5,000 - £10,000.
Trusts come in many shapes and sizes and they’re a flexible way to structure your financial affairs. The law behind them can be complicated, so you must use a solicitor to make sure it is set up correctly based on your individual circumstances and needs.
Originally introduced during the reign of Henry VIII in the 16th century, trusts were invented to solve a gap in the justice system around Wills and how property should be transferred.
Nowadays, trusts are an incredibly useful way of passing on your assets (like property, finances or businesses) whilst still retaining some control over what happens to it (among other benefits, depending on which route you take).
There are only about 200,000 trusts currently active in the UK, but 1/5th of those were set up in the financial year between March 2021-2022 as people have learned about their benefits and realised they’re no longer just for the wealthy.
A living trust is set up during a person's lifetime and allows them to manage their assets and property while they are alive. It helps avoid probate and provides clear instructions for distributing assets after death.
The settlor is the person who creates the trust. They transfer their assets into the trust and set the rules for how those assets should be managed and distributed.
Trusts are most commonly used to protect and control family assets. This is mainly because the assets inside a trust are treated separately from the assets owned by the individual (often for tax purposes), which can be very useful when it comes to things like Inheritance Tax.
Trusts are a great way of ensuring:
In the UK, there are a variety of trusts out there to choose from. Some trusts are set up in a Will so they’ll only take effect after someone dies, and others are set up during their lifetime. Your specialist Trusts Solicitor will help you pick the right type for you based on your needs.
A Bare Trust allows the trustee to look after the assets, while the beneficiary can access them anytime if they are over 18 and competent. It is a straightforward trust where the beneficiary has an absolute right to the trust’s assets.
An Interest in Possession Trust lets the beneficiary enjoy any income the trust assets produce immediately. The trustee must pass all income generated from the trust to the beneficiary and cannot access the funds themselves.
In a Discretionary Trust, the trustee has full control over what the beneficiaries can access and when. This includes setting conditions for access and how often payments are made. It offers flexibility but requires careful management.
An Accumulation Trust does not allow beneficiaries immediate access to trust assets that generate income. The trustee decides whether the income goes to the beneficiaries or is reinvested within the trust, providing a way to grow the trust's assets over time.
A Non-resident Trust applies when all beneficiaries live outside the UK, potentially reducing the tax they need to pay on the trust's income. It’s useful for managing assets and income for beneficiaries who are not UK residents.
A Mixed Trust combines elements of different types of trusts based on your needs, such as a blend of Bare Trust and Interest in Possession Trust. It offers tailored solutions to meet specific financial goals and circumstances.
Trusts for vulnerable beneficiaries, such as those who are disabled or vulnerable children, have special tax treatment that is more favourable. These trusts ensure the beneficiary is provided for in a way that meets their specific needs while maximising tax benefits.
Setting up a trust involves several steps. While it can be simpler than you might think, we recommend working with a solicitor to ensure everything is done correctly:
At GloverPriest, we provide friendly and transparent advice on the best way to organise and manage your assets. Our specialist Trust Solicitors are here to carefully draft the wording of your trust so it accurately reflects your circumstances and needs.
If you would like help with trusts, speak to one of our expert lawyers today - complete our enquiry form here.
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At GloverPriest, we understand navigating the law can be a difficult task to take on alone. That’s why we created this comprehensive guide to help promote information for everyone to use.
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