Irrevocable Trust
Whichever kind of trust you choose to set up, you must decide whether it is irrevocable or revocable. This will depend on what the 'settlor' or donor has written up into the trust's deeds and will make a big difference to the trust's purposes.
Once assets are assigned into an irrevocable trust they must remain there until the trust's contracts are completed or its deeds state otherwise. In some cases it may not be cancelled or changed at all, unless stated by the donor. In other instances, an irrevocable trust may be changed by the the beneficiary only when and if stated in the trust's deeds. Any assets transferred to a beneficiary through an irrevocable trust means that the donor looses both the title and practical terms of the assets. This means that the donor looses asset management control and accordingly any benefits deriving from them.
Although these terms can make an irrevocable trust seem restrictive, there are tax advantages and benefits which an irrevocable trust can offer. Whilst the donor looses any asset benefits such as any income gained, assets in an irrevocable trust are not subject to income or inheritance tax. It is advisable to seek independent financial advice if considering embarking on a tax mitigation plan.
Deciding on which trust to set up is a big decision and may affect the outcome of the trust's assets. If you would like impartial, fee free advice on irrevocable trusts and if they are the right asset management scheme for you, talk to a member of our independent financial advice team:
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