What is a Trust?
A trust is a legal arrangement under which a person gives someone else (Trustees) the job of looking after assets such as money, investments and property, for the benefit of chosen people (Beneficiaries).
Advice and Assistance with Trusts
At BakerLaw, our experienced Wills, Trusts and Probate team can advise on the creation of a new trust, as well as on existing trusts. Choose the option that best suits you below, for details of our services and how we can help:
I need help with an existing trust
Why should I set up a Trust?
If you set up a trust, your Trustees will manage the trust assets for the benefit of the people you want to provide for (Beneficiaries). Your chosen Beneficiaries will have the benefit of the assets, without the responsibility of managing them.
Trusts are used for a wide variety of reasons and some of the most common situations where trusts are used are:
- to provide for a husband or wife after death, whilst also protecting the interests of any children – this can be particularly important for families where there are children from previous marriages;
- to protect the inheritance of young children until they are old enough to take responsibility for their own finances and affairs;
- to provide for vulnerable relatives who are unlikely to be able to look after their own affairs;
- to help with succession planning in a family business.
Who can I appoint as Trustees?
You can appoint between one and four Trustees. You should appoint people you trust and who can cope with the responsibility and work involved in managing a trust. Your Trustees could be family members, long-standing friends or someone independent, such as a professional (e.g. a solicitor or accountant). It is a good idea if at least one Trustee is independent and not a family member or Beneficiary of the trust so that they can always provide an impartial point of view, when taking trust decisions.
Can I give my Trustees direction?
You can tell your Trustees what you would like them to do by leaving a letter of wishes. You can explain why you have set up the trust and how you would like the funds to be managed and used. A letter of wishes is not legally binding, but will provide a useful guide to your Trustees.
What are the Trustees' duties and responsibilities?
Trustees manage the assets of the trust on a day-to-day basis – making payments to beneficiaries, preparing accounts, investing trust funds, reporting any income and gains appropriately to HMRC and paying any tax due. Sometimes, depending upon the nature of the trust, and why it was created, Trustees may be closely involved in the day-to-day welfare of a Beneficiary.
What is a Settlor?
This is a person who creates the trust and puts assets into it. It is the Settlor who decides how assets and any income should be used.
What is a Beneficiary?
This is anyone who might benefit from the assets held in the trust. Depending upon the terms of the Trust, a Beneficiary may be entitled to different types of trust funds, for example a Beneficiary may be entitled to income only, capital only or both income and capital. Some trusts are discretionary meaning that the Trustees will decide what Beneficiaries receive and when. The Trustees are able to make decisions based on the Beneficiaries’ circumstances, taking into account the most tax-efficient way of dealing with the trust assets.
What can be included in a Trust?
This is often referred to as 'trust property' or 'trust assets' and can include money, investments, land or buildings. Personal items ('chattels') such as jewellery and furniture can also be included.
Setting up a Trust
Someone may want to create a trust for a number of reasons. At BakerLaw, we can advise upon the various benefits and implications of setting up a trust. We tailor our advice and approach to the circumstances and wishes of our client, so that we can ensure that the end result effectively achieves your aims.
The costs of creating a trust can vary according to the size and complexity of the trust itself, as well as the circumstances under which it is created.
Our fees
We are happy to discuss costs and offer a fixed fee where possible, for our charges to advise upon the setup of the trust, and prepare any relevant documents. Our standard fixed fee for this service is from £1,500 plus VAT (and disbursements). This fee includes:
- considering any documents you provide prior to our meeting;
- a meeting of approximately 1 hour to discuss the terms of the trust with one of our expert trusts lawyers who will answer your queries in relation to the trust documents(s) and/or your role as a trustee;
- writing to you with a letter confirming all our advice and matters discussed in our meeting; and
- depending upon the circumstances, preparing a document related to our advice.
It may not always be possible to include drafting of related documents within our fixed fee, as this will depend upon the nature of the work required, however we will advise you in advance of any drafting as to whether additional charges will be made.
There are various types of trust that can be created, and the amount of work required to assist with trust creation will depend upon the circumstances and what exactly the Settlor is aiming to achieve.
If you are looking for advice and assistance with the setup of a trust, please contact us on 01252 733770, or email us at privateclient@baker-law.co.uk and we will be happy to provide you with a quote for our services.
Guidance on an Existing Trust
Trusts can be created by someone in their lifetime, as well as on someone's death by their Will. It is quite common for Trustees to be unsure as to their duties and powers on dealing with the trust. This is particularly the case with Will Trusts, where the Trustees may have agreed to act many years prior to the trust actually coming into effect.
The rules on the management of trusts are complex, and Trustees can often be caught out by failing to take action in the best interests of the Beneficiaries, because they are not aware of all the duties and responsibilities that they have as a Trustee. This can lead to personal liability for Trustees, which could have been avoided if the Trustees had taken professional advice on the trust and their role.
At BakerLaw, our experienced trust lawyers can advise upon existing trusts, and guide Trustees as to their duties and responsibilities, so that they can continue to manage the trust going forward, better equipped to protect the interests of the Beneficiaries and themselves.
Our fees
We are happy to offer a fixed fee service for reviewing and advising upon trusts and trust documents, including a face-to-face meeting, followed by a full written summary of our advice, which can be used by the Trustees as a future reminder and guide to their handling of the trust.
Our standard fixed fee for this service is from £1,500 plus VAT (and disbursements). This fee includes:
- considering any documents you provide prior to our meeting;
- a meeting of approximately 1 hour to discuss the terms of the trust with one of our expert trusts lawyers who will answer your queries in relation to the trust documents(s) and/or your role as a trustee;
- writing to you with a letter confirming all our advice and matters discussed in our meeting; and
- depending upon the circumstances, preparing a document related to our advice.
It may not always be possible to include drafting of related documents within our fixed fee, as this will depend upon the nature of the work required, however we will advise you in advance of any drafting as to whether additional charges will be made.
If you would like advice or guidance on a trust, and would like to speak to one of our experienced trust lawyers, please contact us on 01252 733770, or email us at privateclient@baker-law.co.uk to make an appointment.
Registering a Trust with HMRC – Trust Registration Service
A Settlor and Trustees should be aware that when a trust is created, it may need to be registered with HMRC on the Trust Registration Service (TRS).
The law as to which types of trust are required to be registered has changed over the years, and the majority of Trusts are now registrable. If a trust is not registered by the required date, HMRC may charge a penalty for failed or late registration.
If you're a Trustee, but you are unsure whether or not your trust needs to be registered, we can review the trust documents and other relevant details, and advise you upon whether your trust is registrable, or if it might be exempt. We can also assist with the registration of the Trust, and provide you with a summary of the registration details which you will need to retain for management of the trust and the TRS, going forward.
Our fees
Where possible, we aim to offer a fixed fee for our services, to give you certainty as to the costs involved in obtaining advice on and assistance with registering the trust. Our standard fixed fee to register a trust is £500 plus VAT (and disbursements). This fee includes:
- Taking your instructions as to the registration of the trust;
- Providing you with a summary of details required by HMRC, to enable us to register the trust;
- Confirming registration of the trust with the TRS;
- Supplying you with a 'Trust Registration Summary' pack, which will include all key details for your trust on the TRS, for your retention and future use.
If you would like guidance on the TRS, or assistance with completing a trust registration, please contact us on 01252 733770, or email us at privateclient@baker-law.co.uk.
Contact our trusts solicitors in Farnham, Surrey
Our focus is always to provide our clients with peace of mind, and tailor our approach and advice to the needs of each individual client. For further details of our services, and how we might be able to assist you, please contact us online or at our Farnham office on 01252 733770.