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Wills, Tax & Estate Administration

Meet Charlotte Nock

A Trust Fund, or Deed of Trust as they are sometimes called, is a private legal arrangement where the ownership of someone’s assets (which may include property, shares or cash) is transferred to a trustee to look after and use to the benefit of a third person or group of people.

The trustees then become the legal owner of the assets but the trustees must at all times put the interest of the beneficiaries above their own. You should have at least two trustees but can choose up to four. Choose people you can rely on to be your trustees and make sure they are happy to take on this responsibility.

Used correctly, Trusts can safeguard your family’s inheritance and protect your estate for future generations. They are particularly useful when planning how assets should pass from one generation to another especially when family structures are complicated by divorces and second marriages.

Trusts can take effect during the lifetime of the settlor (the person setting up the Trust) or shortly after the death of the settlor (known as the 'Will Trust').

Different types of Trusts

There are a wide range of different types of Trust, depending on how the benefit of the Trust Fund is to be distributed. We can offer advice on which is best for you. Different types of Trusts include:

  • Discretionary Trust
  • Bare Trust
  • Asset Protection Trust
  • Property Trust
  • Personal Injury Trust.
Trust management

A trust is a legal arrangement for managing assets. In a trust, assets are held and managed by one person or people (the trustee) to benefit another person or people (the beneficiary). The person providing the assets is called the settlor.

Different kinds of assets can be put into a trust, including cash, property, shares, and land.

Trusts are set up for a number of reasons, including:

  • to control and protect family assets
  • when a beneficiary is too young to handle their affairs
  • when someone cannot handle their affairs because they’re incapacitated
  • to pass on assets while a settlor is still alive
  • to pass on assets when a settlor dies (a ‘will trust’)
  • under the rules of inheritance if someone dies without a Will (in England and Wales).

The trustees are the legal owners of the assets held in a trust. Their role is to:

  • deal with the assets according to the settlor’s wishes, as set out in the trust deed or their will
  • manage the trust on a day-to-day basis and pay any tax due
  • decide how to invest or use the trust’s assets.

If the trustees change, the trust can still continue, but there must always be at least one trustee.

Trust taxation

Income Tax

Different types of income from trusts have different rates of income tax, with each type of trust being taxed differently.

Inheritance Tax

Inheritance tax will need to be paid on assets put into a trust at various points in the lifecycle of the trust.

For example, inheritance tax is due when:

  • assets are put into a trust
  • a trust reaches the 10-year anniversary of when it was set up
  • assets are transferred out of a trust or the trust ends
  • someone dies and a trust is involved in their estate.

Capital Gains Tax

Capital Gains Tax on trusts is a tax on the profit, when assets that have increased in value are put into or taken out of a trust.

Trust registration

Under the Fifth Money Laundering Directive (5MLD) Trustees have an obligation to maintain and provide information about Trusts and their beneficiaries to HMRC’s Trust Registration Service (TRS).

You must register your trust with HM Revenue and Customs (HMRC) if it becomes liable for any of the following:

  • Capital Gains Tax
  • Income Tax
  • Inheritance Tax
  • Stamp Duty Land Tax or Land and Buildings Transaction Tax in Scotland
  • Stamp Duty Reserve Tax.

You must also register a trust to claim tax relief.

The deadline depends on the tax your trust is liable for. If it is the first time your trust is liable for Income Tax or Capital Gains Tax, the deadline is 5 October in the tax year after it first becomes liable for these taxes.

If your trust has been liable for either tax before, the deadline is 31 January in the tax year after it’s again liable for these taxes.

You must register Trusts by 31 January in the tax year after the one in which the trust is liable for any of the following:

  • Inheritance Tax
  • Stamp Duty Land Tax or Land and Buildings Transaction Tax in Scotland
  • Stamp Duty Reserve Tax.

You must register by the earlier deadline if your trust is liable for more than one tax and both deadlines apply.

We can advise you on the above and undertake the Trust Registration for you.

Personal Injury Trust (PI)

These are a specific type of Trust to protect compensation received in cases of accidental and criminal injuries, clinical and other negligence causing physical and/or mental harm to a person and where compensation is given for any disease or injury caused as a result of a disease.

There are significant means tested benefits and advantages to having a personal injury trust and the possibility of needing expensive future long-term care. There may also be non-benefits related “peace of mind” and practical advantages to having a personal injury trust.

They are also of benefit where there are concerns over the influence of third parties and where there might also be the need to secure an inheritance for vulnerable children and adults.

The trust can be used for just about anything the compensated person needs or wants.

On matter of this kind we work closely with our sister company, Legal 500 ranked specialist Girlings Personal Injury Claims.

Deeds of Appointment & Retirement of Trustees

This is a legal document to be used when a Trustee of an existing Trust, whether a lifetime trust or a Will Trust, wishes to retire and a new Trustee or Trustees is to be appointed in his or her place. It can also be used for Life and Pension Policies held in Trust.

Declaration of Trust

This is a legal document in which a person declares that he or she holds (or two or more persons declare that they hold) assets on trust for the benefit of one or more beneficiaries. A declaration of trust may create a new trust or may confirm the terms of an existing trust.

It sets out the financial arrangements between two people buying a property jointly, and those with an interest in a property.

A Declaration of Trust can set out who owns a property and in what shares. It can also make it clear who is responsible for paying the mortgage, insurance, bills, improvement costs and other such day to day matters.

Deed of Assignment

This is a document for use when a party to an agreement wishes to assign his or her rights and benefits under that agreement to another person.

A deed of assignment, in relation to property, is used to assign an equitable interest in land to another party. The party who is transferring his or her rights to the property is known as the “assignor,” while the party who is receiving the rights is called the “assignee.”

It can be used to assign rights under a Policy (transferring ownership of a life policy from the current owner to another person or organisation) or to assign a debt (stating who is now the legal owner of the debt).

Setting up Trusts can be a complicated process. Our Trust specialists offer a personal service which is tailored to your needs. They also deal with the administration of the Trust which includes preparing annual income and capital accounts, submitting tax returns and advising the trustees on any issues that may arise in connection with the Trust. Together with our Independent Financial Advice team, we are also able to offer clients a complete wealth and estate management service.

For further advice please contact one of our Trust specialists based in Canterbury, Ashford and Herne Bay.

Our Experts

Charlotte Nock

Head of Department
Wills, Tax & Estate Administration

Lesley Rushton

Managing Partner
Wills, Tax & Estate Administration

Louise Wilson

Wills, Tax & Estate Administration

Ovid Busette

Senior Associate Solicitor
Wills, Tax & Estate Administration

Joshua Parton TEP

Senior Associate Solicitor
Wills, Tax & Estate Administration

Poppy Cooke

Associate Solicitor
Wills, Tax & Estate Administration

Sarah Geering

Senior Associate Solicitor
Wills, Tax & Estate Administration

Katie Collis

Assistant Solicitor
Wills, Tax & Estate Administration

Susan Jull

Wills, Tax & Estate Administration Executive
Wills, Tax & Estate Administration

Laura Harvey

Assistant Solicitor
Wills, Tax & Estate Administration

Natasha Boyd

Tax Technician
Wills, Tax & Estate Administration

Stephanie Stocker

Assistant Solicitor
Wills, Tax & Estate Administration

Sophia Wright

Wills, Tax & Estate Administration; Dispute Resolution

Charlotte Goodwin

Trainee Solicitor
Wills, Tax & Estate Administration

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