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Making a Trust

BHP Law Trust solicitors can help you make a Trust and answer any other questions regarding Trust services. See below for more information about Trusts.

 

What is a Trust?

A Trust is created when you give assets (generally property, shares or money) to a small group of people (the 'Trustees') and tell them to hold onto those assets on behalf of one or more different people (the 'beneficiaries'). 

A Trust can be made during your lifetime or within a Will. Generally, the terms of the Trust have to be written down so that everyone knows where they stand.

 

Why Make a Trust?

Generally, Trusts are made for one of two reasons:

1) Tax - for example to give assets away so as to avoid paying inheritance tax on those assets when you die

2) Family planning - you may want to give assets to your children but are worried about them being too young, or losing those assets in a divorce.  By putting the assets into trust you can protect against these problems.

 

Common Examples of when Trusts might be used 

  • Holiday homes - you might want to put a holiday home into a Trust so that all the family can use it, but you won't have to pay inheritance tax on it when you die;
  • In a Will - if you are married or have a partner, using a Trust in your Will can help save inheritance tax when one or both of you dies
  • Care home fees - if you put your home into a Trust, you may avoid the local authority being able to assess your home as part of your assets when deciding whether you can afford to pay care home fees.  See our advice for the elderly page for more detail.

 

Why can't I just give my assets outright to who I want?

Some people wonder why they need to use a Trust - why not just give your assets straight to whoever you want?  Here are some reasons why that might not be a good idea:

  • Control - if you give assets to a Trust and you are one of the Trustees of the Trust, you have control over whether the asset is sold or not.  There have been lots of cases of people giving assets (even their homes) straight to their children, who then go on and sell that asset straightaway, even if they have promised not to!
  • Capital gains tax - if you give an asset straight to someone, you will have to pay capital gains tax if it is worth more now than it was when you bought it - even though you haven't actually sold it.  If you use a Trust you can in certain circumstances avoid paying that tax straightaway
  • Divorce/bankruptcy - if you give an asset to someone it will be counted as theirs if they get divorced, are made bankrupt or even die.  This could mean the asset is lost in a way you never expected. If you use a Trust this shouldn't be an issue

 

How do I Make a Trust?

You should see a Trust solicitor to make a Trust. There are different types of Trust and a Trust solicitor can advise which one is best for you. Trust solicitors can also make sure that you know all the tax effects before you do anything, which is far better than being landed with a big tax bill you weren't prepared for!

 

More Information about Making a Trust

Call BHP Law Trust solicitors today for a free no obligation chat about our Trust services on 0800 590 019 or fill in the online enquiry form and a member of the team will contact you from your local BHP Law office in either Newcastle, Durham, Darlington, Tynemouth or Stockton in Teesside.

Alternatively please email with your details to info@bhplaw.co.uk and one of our Team with contact you within 24 hours.

 

 

Karen Pratt Partner
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