Setting up a trust: Your comprehensive guide to ensuring your legacy


Are you contemplating ways to manage your assets, ensure they’re preserved for the future, and provide financial security to your loved ones? If so, setting up a trust could be the ideal solution. 

A trust is a legal arrangement that allows you to transfer assets to a designated person, a trustee, who will manage those assets for the benefit of another person or a group of people, known as beneficiaries. This article will guide you through the process of setting up a trust in the UK. 

 

Step 1: Identify the purpose of the trust

Firstly, understand why you want to establish trust. Trusts can serve various purposes, such as asset protection, tax planning, maintaining control over assets, or taking care of minors or incapacitated family members. Your purpose will guide your decisions in the next steps of setting up the trust. 

 

Step 2: Choose the type of trust

There are different types of trusts in the UK, and the choice depends on your specific needs: 

Bare trusts: Assets in the trust are held in the name of a trustee but beneficiaries have the right to the trust’s assets and income as they turn 18 in England and Wales or 16 in Scotland. 

Interest in possession trusts: The beneficiary has a right to the trust’s income but not necessarily the capital. 

Discretionary trusts: The trustees decide how the assets are distributed among the beneficiaries. 

Accumulation trusts: Trustees can accumulate income and add it to the trust’s capital. 

Mixed trusts: These are a combination of the above types. 

 

Step 3: Select the trust assets

Trust assets can include money, property, shares, life insurance policies, and more. Clearly define these assets because they’ll be the backbone of the trust agreement. 

 

Step 4: Appoint trustees

The trustees will manage the trust, so choose individuals who are trustworthy and capable. You could also appoint professional trustees or a trust corporation. 

 

Step 5: Identify the beneficiaries

Define who will benefit from the trust. These can be specific individuals, a class of people, or even charitable organisations. 

 

Step 6: Draft the trust deed

This is the legal document that sets up the trust. It outlines the terms of the trust, details the trustees, beneficiaries, and trust assets, and provides instructions on how the trust is to be managed and assets distributed. You will likely need a solicitor to draft this document to ensure all legal requirements are met. 

 

Step 7: Register the trust

Depending on the type of trust, it may need to be registered with HM Revenue and Customs (HMRC) for tax purposes. Consult a professional to understand the registration process. 

 

Step 8: Transfer assets to the trust

Finally, the assets are legally transferred into the trust. This process varies depending on the type of asset and may involve signing documents or changing the legal ownership of the asset. 

 

Setting up a trust involves complex legal procedures and requires professional guidance to make sure it’s done correctly. By following the steps outlined in this guide, you’re taking a step towards managing your assets effectively and preserving them for the future. 

Take the worry out of setting up a trust. Secure your legacy with professional help. Contact the experts at Wills & Trusts today for a comprehensive, tailored service that takes your individual circumstances into account. Let us help you ensure your wealth is managed exactly as you wish, for the benefit of those you care about most. 

Paula O'Reilly

November 1, 2023