Although most trusts are used for minimising estate taxes, their flexibility enables them to serve many purposes. For example, trusts can be used to help you maintain your lifestyle, to protect the financial interests of your family and to negate the potentially damaging effects that health, personal and business risks pose to your wealth. Trusts can be stand-alone arrangements or established in conjunction with companies, foundations and life assurance policies.
A trust enables you (the ‘grantor’) to assign assets to a third party (the ‘trustee’) such as an asset manager, banker, accountant, or a trusted individual of the grantor’s choosing. The trustee holds those assets on behalf of an intended beneficiary or beneficiaries. Depending on the type of trust, the grantor can gain access to the assets and dictate exactly how and when those assets are passed on (if at all) to beneficiaries.
Once in place, and providing the trust is deemed to be ‘irrevocable’, the assets held within the trust may not be treated as part of your taxable estate on your death and therefore will not be subject to estate tax.
- the avoidance of probate — beneficiaries may gain access to assets more quickly than if they were transferred via a will
- When assets pass outside of probate, that event remains private rather than becoming a matter of public record
- Assets held within a trust can be fully divorce protected and fully creditor protected
Our partners advise individuals, beneficiaries and trustees on the creation and administration of onshore and offshore trusts, including the development of bespoke trust instruments to meet specific requirements.