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How long does a trust last?

a trust reaches the 10-year anniversary of when it was set up. assets are transferred out of a trust or the trust ends. someone dies and a trust is involved in their estate.

lawsociety.org.uk - Trusts | The Law Society
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In a trust, assets are held and managed by one person or people (the trustee) to benefit another person or people (the beneficiary). The person providing the assets is called the settlor. Different kinds of assets can be put in trust, including: cash

property

shares

land Trusts are set up for a number of reasons, including: to control and protect family assets

when a beneficiary is too young to handle their affairs

when someone cannot handle their affairs because they’re incapacitated

to pass on assets while a settlor is still alive

to pass on assets when a settlor dies (a ‘will trust’)

under the rules of inheritance if someone dies without a will (in England and Wales) Settlors The settlor decides how the assets in a trust should be used – this is usually set out in a document called the ‘trust deed’. Sometimes the settlor can also benefit from the assets in a trust – this is called a ‘settlor-interested’ trust and has special tax rules. Trustees The trustees are the legal owners of the assets held in a trust. Their role is to: deal with the assets according to the settlor’s wishes, as set out in the trust deed or their will

manage the trust on a day-to-day basis and pay any tax due

decide how to invest or use the trust’s assets If the trustees change, the trust can still continue, but there must always be at least one trustee. Beneficiaries There might be more than one beneficiary, like a whole family or defined group of people. They may benefit from: the income of a trust only, for example from renting out a house held in a trust the capital only, for example getting shares held in a trust when they reach a certain age

both the income and capital of the trust

Setting up a trust Trusts can be set up at any time or written into your will. You can find a solicitor to help you set up a trust. A solicitor will guide you through setting out: what the assets are

who the trustee and beneficiary are

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when the trust becomes active Choose people you can rely on to be your trustees and make sure they’re happy to take on this responsibility. You should have at least two trustees but can choose up to four. Types of trust There are many different types of trust that can be set up depending on how you want to control your assets. Bare trust This is the simplest trust and gives all assets to the beneficiary as long as they’re 18 years old or over (in England and Wales). Assets in a bare trust are held in the name of a trustee. However, the beneficiary has the right to the contents of the trust at any time if they’re 18 years old or over (in England and Wales). This means the assets set aside by the settlor will always go directly to the beneficiary. Bare trusts are often used to pass assets on to young people – the trustees look after them until the beneficiary is old enough. Interest in possession trust The beneficiary can get income from the trust straight away but cannot control the assets that provide the income. The beneficiary has to pay income tax on the money they receive. It’s common for a settlor to give their partner access to this kind of trust in their lifetime, with any assets passing to the settlor’s children after their partner dies. Discretionary trust The trustees have complete control over the assets and the income they generate, deciding how and when to give them to the beneficiaries.` People may set up this kind of trust for their grandchildren, making the grandchildren’s parents trustees. Mixed trust This combines elements from different trusts. For example, it might give the beneficiary a right to the income (called an interest in possession) of half of a trust fund. Trust for a vulnerable person If the only beneficiary is vulnerable, for example someone who is disabled or an orphan, they will pay less tax on the income from the trust. Read about trusts for vulnerable people Non-resident trusts All the trustees live outside the UK. This can mean the beneficiary pays less income tax. Understand the basic rules of non-resident trusts Find out about income and benefits from the transfers of assets abroad or from non-resident trusts Read more about types of trusts on GOV.UK Long-term care If you need long-term care and you benefit from a trust, your local authority will take this into account when assessing your circumstances. If you’re entitled to the income of a trust only, the capital (lump sum) will not be considered You may be able to put your property in trust before going into care, so it’s not considered to be owned by you and is not used to fund your care. However, your local authority may challenge this if it can show that your main reason for putting the property in trust was to avoid care costs. Get advice from a solicitor before putting your property in trust.

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Acting as a trustee A trustee is responsible for managing the assets in a trust and fulfilling the purpose of the trust. The role of a trustee carries a lot of responsibility. It’s recommended you get advice from a solicitor before agreeing to be a trustee. Trustees must be willing to put in the time and effort necessary to make sure that the settlor’s wishes are carried out, and that the assets are managed for the beneficiaries. If you’re asked to be a trustee, talk to the settlor about their expectations of you, and who the other trustees are (you’ll be expected to work with them in the future to manage the trust). Read about trustee tax responsibilities on GOV.UK

lawsociety.org.uk - Trusts | The Law Society
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