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.
Why are Will Trusts important?
Wills often create Trusts as the person making the Will (‘the Testator’) would rather leave property on Trust rather than making an outright gift.
There are several reasons why someone might do this.
For example, if the Testator has young children and passes away then a Trust would be created.
In England & Wales a person under 18 is unable to hold property (realty) in their name and therefore the property would be held by the Trustees until the child attains 18 (or later depending on the terms of the Trust). A child is also unable to give a valid receipt so where there is money or other assets the Trustees would need to hold safely these on Trust until the child can give fully discharge the Trustees of their duties.
Parents have various options when it comes to creating Trusts in their Wills for minor children and specialist advice should be sought.
In other cases, a Testator may not be sure of who exactly to benefit or what the financial situation of his loved ones may be in the future. By incorporating a Trust, he can give his Trustees greater flexibility to distribute his assets after his death according to the circumstances of his family and loved ones at the time.
In other cases, a Testator may wish to ensure that his adult children from a previous relationship are protected and by creating a Trust in his Will he can ensure that his property passes to his children after the death of his current Partner.
There are a numerous factors and implications to be considered when writing a Will Trust. 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.