Setting Up a Trust Fund
There are many different types of trust fund which can be set up in order to protect assets for loved ones in the future. The process of setting up a trust fund will differ for each trust fund available.
Various Trust Funds
Trust funds may include, but are not limited to:
Trust fund for a child (assets protected for minors)
Charitable trust fund (assets donated to one or a number of charities)
Family trust fund (assets which are protected by, and given to, family members)
Generally, trust funds are set up by an individual (a donor or settlor) to protect assets and guarantee they are transferred to who, and exactly how, they wish. For instance, assets can be placed in a trust for the benefit of others (beneficiaries) who may be incapable of managing their own financial affairs. Alternatively assets in a trust fund can be protected from being sold to pay for long term care.
Trust funds may also be set up to to guarantee an income for loved ones. In order to set up a trust fund there must also be another individual, known as a trustee, who can manage these assets on behalf of the beneficiary. Finally, all parties must adhere to what is written in the trust deeds: the legal document in which the terms and conditions of a trust are founded.
Depending on what kind of trust you set up, you may need to inform HM Revenue & Customs. This needs to be done if you expect the trust to receive additional income, if there is a chargeable capital gains or if assets are susceptible to inheritance tax.
It may also be beneficial to consult a professional when writing and forming the trust deeds to ensure they are legally binding. Whichever stage of setting up a trust you are at, it may be helpful to seek independent financial advice:
The Financial Conduct Authority does not regulate taxation and trust advice
More tax planning and trust guides
Income tax calculator
Use our tax calculator to estimate your income tax and NI, and then get a breakdown on exactly how your tax is spent:Tax calculator
Get tax or trust advice
Speak to an expert adviser today about your tax planning or trust-related needs. 100% confidential and no obligation.Get advice »