4th September 2019

Today, you don’t have to be incredibly rich for your family to benefit from the creation of a trust. They can offer long-term asset protection and have a variety of uses as part of financial planning strategies. A family trust can help protect your family’s assets for the benefit of future generations and may be used to protect the family home.

What is a trust?

A trust is a legal arrangement which allows assets, usually property or money, to be looked after by a trustee for the good of one or more beneficiaries. Those beneficiaries can be named individuals, such as your children, or can be children who are yet to be born.

Why set up a trust?

They can have a variety of uses such as:

  • Protecting the financial interests of a young beneficiary by retaining control of the assets until they reach the age of 18 (16 in Scotland)
  • Looking after the interests of somebody who can’t handle their own financial affairs through incapacity
  • Providing for a husband or wife, while keeping the assets intact for the benefit of children
  • Reducing Inheritance Tax (IHT) liability by taking assets out of an estate, thereby reducing the amount on which IHT might otherwise be payable
  • Protecting assets on marriage
  • Ensuring that the proceeds from a life insurance policy go to the beneficiary without waiting for probate, and don’t form part of the estate for IHT purposes.

Setting up a trust

The choice of trust will depend on who the beneficiaries are, what the assets are, and how and when you want them distributed. Taking advice on the type of trust that is most suitable for your circumstances is best.

The Financial Conduct Authority does not regulate some forms of taxation advice.