Family Law Guide

Guide to trusts

Guide to trusts

Creation, administration and termination of trusts

We have extensive experience in the creation, administration and termination of family trusts both in England and offshore, and we offer specialist advice on all aspects of the use of trusts. Trusts are not always the answer, but can serve a very useful purpose in many situations.

Using a trust can be an effective way of protecting assets from the consequences of divorce or bankruptcy.

Trusts can be created by lifetime gift or by will. They can hold a wide variety of assets. The most common reasons why individuals choose to create trusts are tax and estate planning, and asset protection, for example:-

Parents or grandparents might wish to set up trust funds for the benefit of younger generations, with the assets transferred to the trust falling outside the donor’s estate for inheritance tax purposes once the donor has survived the gift by seven years.

Trusts can be used to enable ownership of assets to be given to family members or others without capital gains tax having to be paid on the gift.

Using a trust can be an effective way of keeping assets which arise on death (such as life insurance policies, employers’ death in service benefits, and death benefits from pension funds) from falling into the inheritance tax net.

Trusts can be an effective way of managing assets on behalf of people who are incapable of looking after their own affairs as a result of illness, injury, or dependency.

Once a trust is created we can deal with all of the accounting and tax compliance work which may be needed on an ongoing basis.

We can deal with the termination of trusts, including all related tax and general advice, as and when it is felt that they are no longer required given all relevant family circumstances.

Challenging trusts

If you are a trustee or a beneficiary sometimes issues can arise concerning a trust.

If you are a trustee we can assist with the following:

a) Defences to breach of trust claims

b) Unforeseen tax liabilities

c) Handling difficult beneficiaries

If you are a beneficiary we can assist with the following:

a) Seeking information from trustees

b) Requesting distributions from trustees

c) Speeding up the administration of trusts

d) Actions for fraud or breach of fiduciary duties

If you are interested in discussing trusts please see How Vardags can help with trusts.