The Advantages of Trusts

The Birmingham Post (England), October 7, 2010 | Go to article overview

The Advantages of Trusts


repare to be baffled.

PHM Revenue & Customs describes a trust as "a disposition of property to a person (trustee) or persons jointly (trustees) in whom the legal title then vests in the confidence that the benefits will be applied to the advantage of one or more other persons (beneficiaries) or some other object permitted by law".

This may appear bemusing but hardly does justice to some of the complexities involved in trusts. However, the use of trusts is becoming more and more widespread as people begin to see the benefits of using trusts, especially for estate and inheritance tax planning.

A trust is a legal instrument which has its roots in Middle Ages. When knights about to join the Crusades in the Middle East would transfer their possessions and land to the safekeeping of a trustee while they were away. The trustee would be given legal title to the knight's land and possession and have carte blanche to manage them in his absence, provided that any decisions they took were for the knight's (the settlor in legal parlance) benefit rather than their own.

It soon became apparent that trusts had certain advantages in terms of taxation.

How can the settlor be liable to tax on the property if he no longer owns it? Trusts became the standard tool for the landed aristocracy to maintain control over their estates and avoid death duties. They also became the battleground between tax inspectors and trust lawyers to gain the upper hand, a battle which still continues. In modern times, the range and use of trusts have become more sophisticated but the principle remains the same. Trustees are now commonly companies set up specifically for the purpose of running trusts and the beneficiary of a trust can be anybody the settlor chooses, very often family members or charities.

The trustee will be the legal owner of any assets transferred to the trust and must look after those assets according to the terms of the trust deed drawn up at the outset as determined by the settlor or a deceased settlor's will.

A very common use for trusts is to ensure that children who are left or given large sums of money do not have full access to it before they are mature enough to use it wisely. Trusts can also be set up to ensure that the donor retains more say in how their assets can be used after their death or to prevent a family business from becoming fragmented if its legal ownership is split between too many beneficiaries. Almost any type of assets - property, bank deposits or shares - can be held in a trust.

Trusts can also be used for tax planning purposes, for asset protection (by distancing assets from their owner in the event of divorce or company failure) and for those seeking some privacy for their families when they die. The contents of a will are on public record, but the contents of a trust are not.

A discretionary will trust was an essential piece of inheritance tax planning for any couple with assets values over the nil-rate inheritance tax band. By ensuring that each spouse used their IHT-free allowance, thousands of pounds of tax on their estate could be avoided. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Advantages of Trusts
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.