Use of Trusts
Trusts are powerful and flexible tools for estate planning, asset protection, and tax-efficient wealth transfer. Used correctly, they can reduce Inheritance Tax, protect assets for vulnerable beneficiaries, and allow controlled distribution of wealth across generations — while keeping assets out of reach of future creditors or divorcing spouses.
What are the benefits?
IHT Efficiency
Assets transferred into most types of trust begin to move outside the settlor's estate for IHT purposes, subject to a seven-year rule. Trusts also provide a mechanism for making larger gifts without losing all control over how the assets are used.
Protection of Assets
Assets held in trust are generally protected from the beneficiaries' creditors, divorcing spouses, and potentially from being dissipated by beneficiaries who are not ready to manage wealth independently. This makes trusts ideal for protecting inheritance for children or vulnerable family members.
Controlled Distribution
A discretionary trust allows the trustees to determine how and when income and capital are distributed among a class of beneficiaries, providing flexibility to respond to changing family circumstances and tax positions.
Nil Rate Band Trusts
A nil rate band discretionary trust written into a will can secure the available nil-rate band on the first death in a married couple, preventing it from being wasted and effectively doubling the amount that can pass on the second death free of IHT.
How can Zenus Tax help?
We advise on the most appropriate trust structure for your objectives (discretionary, bare, interest in possession, accumulation and maintenance)
We advise on the tax position of the trust — income tax, CGT, and IHT ten-year and exit charges
We prepare trust tax returns and advise trustees on their ongoing compliance obligations
We work with your solicitor to draft the trust deed
Frequently Asked Questions
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