Setting Up A Trust Fund
There are many different types of trust fund which can be set up in order to protect assets for loved ones in the future. The process of setting up a trust fund will differ for each trust fund available.
Various Trust Funds
Trust funds may include, but are not limited to,:
Child Trust Fund (assets protected for minors)
Charitable Trust Fund (assets donated to one or a number of charities)
Family Trust Fund (assets which are protected by, and given, to family members)
Investments Trusts (an investment fund which invests in hope of capital growth and / or income)
Generally, trust funds are set up by an individual (a donor or settlor) to protect assets and guarantee they are transferred to who, and exactly how, they wish. For instance, assets can be placed in a trust for the benefit of others (beneficiaries) who may be incapable of managing their own financial affairs. Alternatively assets in a trust fund can be protected from being sold to pay for long term care. Trust funds may also be set up to to guarantee an income for loved ones and to avoid hefty inheritance tax payments. In order to set up a trust fund there must also be another individual known as a trustee who can manage these assets on behalf of the beneficiary. Finally, all parties must adhere to what is written in the trust deeds: the legal document in which the terms and conditions of a trust are founded.
Depending on what kind of trust you set up, you may need to inform HM Revenue & Customs. This needs to be done if you expect the trust to receive additional income, if there is a chargeable capital gains or if assets are susceptible to inheritance tax. It may also be beneficial to consult a professional when writing and forming the trust deeds to ensure they are legally binding. Whichever stage of setting up a trust you are on, it may be helpful to seek independent financial advice:
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