What is a Trust?
A Trust is a relationship that is created and exists between a legal owner of assets (the Trustee) and the equitable owner (the beneficiary). A Trust does not have its own distinct legal personality like a company. It is therefore the Trustees that hold the legal title of the assets in their name but subject to the duty they owe to the beneficiaries of the Trust.
A Trust can be created in lifetime or on death by your Will.
Common uses of Trusts today
A Trust known as a Discretionary Trust can be used by a parent (for example) to protect an adult child without giving them a fixed interest in the trust property.
This type of Trust can potentially be used to protect the assets and children who may be at risk of divorce, drug or alcohol dependency or in a troublesome relationship.
Assisting loved ones who may be incapacitated
A trust arrangement could be used where a person is unable to hold property themselves. For example, they may be a minor or may lack capacity. A trust may offer a flexible (and sometimes a cheaper alternative) compared to a Deputyship under the Mental Capacity Act 2005.
Provision for family members and estate planning
A person may wish to limit the amount of available capital to their potential beneficiaries to ensure it is preserved for future generations and a Trust arrangement can assist with this.
Some people wish to leave property or money to certain causes or specific animals. A very carefully drafted trust would enable this to happen. There are stringent rules relating to purpose trusts and advice should be sought to make sure the gift to your chosen beneficiary does not fail.
Joint ownership of property
There are two ways that a property in England & Wales can be owned jointly and that is a ‘joint tenancy’ or a ‘tenancy in common’ commonly referred to as Joint Tenants or Tenants in Common.
In both cases the property is held under a Trust of Land. However, a joint tenancy and a tenancy in common have fundamentally different features. A key difference is how the property devolves on death. It is important to understand this difference and plan accordingly.
Joanna Ensor is a Solicitor and Associate member of the Society of Trust and Estate Practitioners. She has successfully undertaken the STEP Advanced Certificate in Will Preparation and prepares Wills in accordance with the STEP Will Writing Code.
Contact our Will solicitors in Ruislip, Middlesex