Trust and Asset Planning


Once perceived as the domain of the very wealthy, trusts have become a key element of inheritance planning for any individual with a significant estate; and can play an important role in minimising tax liabilities and protecting assets.

Trusts provide a mechanism for transferring the ownership of your assets. Once properly formed a trust is managed by trustees, who distribute the proceeds of the trust to the beneficiaries in accordance with whatever instructions you have enshrined in the trust. Trusts are also much more straightforward to establish than many people perceive. Basically a trust is a written letter of wishes that the asset, which forms the trust, is set aside from a settlor’s estate to be managed to achieve a specific purpose, usually to the benefit of a beneficiary at some time in the future.

Most commonly trusts are used as asset protection vehicles and can be especially useful for someone who is in business and wants to protect the families’ assets from creditors or used to protect money set aside for a particular need in the future such as school fees or passing assets to the next generation.

Using a trust arrangement can be equally as effective as using an offshore corporation to mitigate tax liabilities.

More than ever, with the increasing values of property and governments trying to increase revenues wherever possible than it has become more important to look towards planning long term financial planning and use these types of arrangements to protect your family and your assets.

Lower tax liabilities

Because property that is placed in a trust is deemed to be outside your estate in most jurisdictions, as a consequence, your inheritors will benefit from much lower tax liabilities as well as avoiding the complexities of probate for that asset.

People should be aware that probate affects everyone’s estate. It is a legal process that transfers the assets, legally, to the beneficiaries in line with the deceased’s wishes. If an estate is simple and straightforward, then this may only take a few months to finalise. However, if an estate is complex with assets held in several jurisdictions or relatives contesting the validity of any inheritance then the process of Probate can take years. For the surviving family this can mean severe financial hardship as all assets including cash holdings are frozen and cannot be used to pay inheritance taxes which must be paid within six months or the Estate Duty Office will impose severe penalties for late payment. This can only add to the distress and hardship of the surviving family. But with planning this can all be avoided.

We can arrange for a professional trust company to provide more detailed information for you. For more information please contact your adviser. If you do not currently have an adviser, please do not hesitate to contact us. You can email us with your details and one of our advisers will contact you shortly.