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A trust—a type of fiduciary arrangement that makes it possible or a third-party to hold your assets on your behalf—is known to be a vital tax planning tool. However, there are many other benefits that you can get with this legal vehicle. Unfortunately, setting one up isn’t always easy.

Trusts can be difficult to understand if you don’t have a basic understanding of estate planning and legal jargon. Keep in mind that there are different types of trusts and you should seek proper counsel if you plan to set up one. 

Wondering if why should go through the hassle at all? We think you should. Here are seven reasons to set up a trust:

1 - A Trust Protects Your Assets

One of the most effective ways to protect your assets is with the help of a trust. When assets are transferred to such an account, it is no longer considered a part of the Settlor’s property. As a result, the wealth cannot be seized should the Settlor encounter financial difficulties. 

2 - A Trust Helps You Save On Taxes

Since the assets listed under a trust are no longer considered the possession of the Settlor, any income and capital gains that the assets generate are taxed according to the rules of the Trustee. The inheritance tax is eliminated even in the case that the Settlor dies. When such a legal vehicle is structured correctly with the help of a professional, you can enjoy significant tax savings. 

3 - A Trust Ensures Confidentiality 

Individuals who wish to keep their assets confidential even in the case that the Settlor dies can do so. Proving a will is a public procedure. Therefore, those looking to legally keep their assets confidential often transfer those assets via a trust. 

4 - A Trust Lets You Decide On Distributions

A trust allows for a broader and more flexible distribution of assets. There are some countries that follow forced heirship, meaning that an individual’s assets are assigned to certain members of the family. Having a trust, then, allows them more control of who gets the assets. 

5 - A Trust Eases Estate Planning

There are times when people don’t want certain assets to be passed on to their heirs. With a trust, that is possible as it allows for specific arrangements. The legal vehicle allows an individual to assign capital, source of income, or provisions for educations as he or she sees fit. 

6 - A Trust Preserves Family Assets

One of the reasons people often set up a trust is to preserve family assets. With one in place, you can ensure that your assets are not be divided amongst the heirs but rather retained as one to allow for accumulation. The Trustee will be allowed to make provisions for payments to the heirs as the need arises. That way, the assets remain intact and continue to work for later generations. 

7 - A Trust Continue A Family Business

When there is no one to take over after a business owner dies, heirs often liquidate the business. However, not all business owners want this to happen and wish for their family business to run despite their death. With a trust, this becomes possible. Specific provisions can be put in place for the members of the family, which is helpful if they don’t have enough experience to run the company. The trust will ensure that the business continues to operate until the right person is able to step up and take charge. 

Conclusion

Trusts can help protect your assets, help you save more on tax, and even keep the family business running despite your demise. If these reasons resonate with you, perhaps it’s time to begin drafting a trust with a professional. 

Here at Harry Robinson WM, we can help guide you towards a brighter future for your business and finances in the UK. Let our professionals advise you on the right trust. Contact us today!

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

The drafting of a Trust may involve the referral to a service that is separate and distinct to those offered by St. James's Place. Trusts are not regulated by the Financial Conduct Authority.