When people hear the word ‘trust’, they often think of the ultra-wealthy, with their planes and yachts, or ‘trust fund kids’ who have never worked a day in their lives. But here’s a secret: trusts aren’t just for the rich and famous. They’re useful for anyone who wants to manage their wealth properly.
So, let’s break down what trusts are, why they’re beneficial, how they can fit into your financial plans— and why you don’t have to have millions salted away on a Caribbean island to find them useful.
What’s a trust?
A trust is a legal arrangement which owns the assets gifted to it by the ‘settlor’. Those assets are administered by a ‘trustee’ on behalf of the ‘beneficiary’. The trust is managed by referring to a type of instruction manual, written by the settlor, which is known as the trust deed. This tells the trustee how the settlor wants the assets to be managed and distributed.
Why bother with a trust?
One of the main advantages of a trust is that it can be used for efficient estate planning. Unlike a will, which has to go through probate, assets that have been transferred into a trust can be transferred directly to your beneficiaries. This can save time, cut down on legal fees, and keep your affairs private.
Trusts can also offer tax advantages, such as sheltering your assets from inheritance tax. Since the assets are owned by the trust, they don’t form part of your estate. In addition, depending on the location, or domicile, of the trust, one may also be able to reduce or eliminate other taxes. This means more money being left in the trust for the benefit of those you care about.
Would you like to ensure that your assets are distributed in a specific
