Trusts play a vital role in many financial plans, offering a smart and effective way to protect wealth, provide for loved ones, and manage how assets are passed on. But despite their importance, they’re often misunderstood or overlooked. So, what exactly is a trust, and why might it matter to you?
What is a Trust?
A trust is a legal arrangement in which an individual (known as the settlor) transfers assets to trustees. These trustees are responsible for managing the assets on behalf of the beneficiaries — the people who will benefit from the trust.
The terms of the trust are set out in a trust deed, which outlines how the assets should be handled and distributed. Trusts can hold a variety of assets, including property, investments, cash and business interests.
Why use a Trust?
Trusts can provide a range of benefits depending on your financial goals and family circumstances:
- Protecting your wealth: Trusts help ring-fence assets for future generations, providing reassurance that your estate is managed in line with your wishes.
- Inheritance planning: You can control when and how your beneficiaries receive their inheritance — useful when supporting children or family members through key life stages.
- Safeguarding assets: Trusts can provide protection against claims from creditors or during divorce proceedings.
- Supporting good causes: Trusts can also be used for charitable giving, enabling efficient donations and long-term impact.
They’re a key part of financial planning
Beyond the immediate benefits, incorporating a trust into your financial plan brings additional advantages:
- Control: You decide how and when the assets are distributed — and to whom.
- Flexibility: Certain trusts, such as discretionary trusts, allow trustees to make decisions based on beneficiaries’ changing needs.
- Privacy: Unlike Wills, trusts generally remain private documents.
- Business succession: Trusts can help with the smooth transition of a business to the next generation.
- Tax planning: Gifting assets into trust can reduce your estate’s liability for Inheritance Tax after seven years.
Trustee responsibilities: Know your role
Becoming a trustee is a meaningful way to support someone you care about, but it’s also a serious legal commitment. You could be responsible for the trust’s assets for many years, and you must always act in the best interests of the beneficiaries.
Trustees must comply with the trust deed, act prudently, and follow the Trustee Act 2000. You’re also legally required to register the trust with HMRC and nominate a lead trustee to manage communications and updates.
Registering a Trust: What you need to know
Most UK trusts now need to be registered with HMRC’s Trust Registration Service (TRS). Failing to register can lead to financial penalties — and if HMRC believes the failure is deliberate, more severe penalties may follow.
To register a trust, you’ll need a Government Gateway user ID and password. You can create this online if you don’t already have one. Each trust must have its own ID.
The lead trustee is responsible for keeping the trust’s details up to date. Information required includes:
- The trust’s name and creation date
- Names and details of the settlors, trustees and beneficiaries
- The type and value of assets held in the trust
If you’ve previously registered a trust, you may now be asked to provide additional information. New trusts must be registered within 90 days.
For a step-by-step guide, visit: www.origenfs.co.uk/assets/Registering-your-trust-guide.pdf
When did you last review your Trust?
Like any part of your financial plan, trusts should be reviewed regularly. Changes in family, finances or legislation may mean your current arrangement is no longer fit for purpose.
How Origen can help
Trusts offer significant benefits — but they come with responsibilities too. At Origen, we’ll help you navigate those complexities. As well as setting up a new trust for you, your adviser can confirm whether your trust needs to be registered, guide you through trustee duties, and ensure your trust continues to support your wider financial objectives.
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