Advice - Investments and Trusts
A trust is a way of making sure that an asset is held for the benefit of other people without necessarily giving them full control over it. A trust is established when there is a transfer of an asset by a person (the settlor) to other people (the trustees) who must hold and administer the gifted asset (the trust fund) for the benefit of specified people (the beneficiaries) in accordance with the terms of the trust.
The trustees are obligated under law to invest wisely, to not take unwanted risk and also to not just hold trust funds on deposit because it is ‘safe’ – the trust beneficiaries could rightly be upset if their fund has barely kept pace with inflation compared to the alternative investment opportunities available.
Trusts have several advantages in estate planning.
- You can use a trust to make a gift to anyone, of any age. By leaving financial control with the trustees, you can make sure that the beneficiary has the financial guidance they need.
- You can make sure that your gift is passed on at the time you choose. This might be when you die or it might be linked to a specific life event, such as a grandchild's education.
- Making a gift into a trust can help to minimise your liability to Inheritance Tax.
- A trust can help speed up the administration of an estate and avoids the need for probate (the official proving of a will) for the gifted asset when you die.
The Financial Services Authority does not regulate taxation and trust advice.
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