Asset Protection - Sutton McGrath Hartley

Trusts for Tax Planning & Asset Protection

A Trust can be established during your lifetime or by Will.

What is a Trust?

Underhill's Law of Trusts and Trustees defines a trust as:

"An equitable obligation binding a person who is called a trustee to deal with property which is called the trust property for the benefit of persons who are called beneficiaries."

In other words, it is a legal agreement whereby a Settlor (or settlors) has transferred the legal title in assets to others (the Trustees), for the benefit of third parties (the Beneficiaries).

What is a Settlor?

The Settlor is the person who creates the trust by transferring assets to it.

What is a Trustee?

Trustees are the legal owners of the assets held in the Trust. There must be at least one Trustee, and often it is necessary to have a minimum of two.

Trustees are in general responsible for:

  • Managing the Trust on a day-to-day basis
  • Carrying out the Settlor’s wishes
  • Dealing with the assets in accordance with the Trust deed
  • Paying any tax due
  • Deciding how best to invest the trust assets

Specific duties and responsibilities will depend on the type of Trust created by the Settlor.

What is a Beneficiary?

Anyone who benefits under the Trust. There can be more than one beneficiary. Often classes of Beneficiaries are defined in the Trust deed, for example, children, nieces and nephews.

What assets can be placed in Trust?

A Trust can hold most assets, including:

  • Cash
  • Investments
  • Houses or buildings
  • Land
  • Paintings
  • Jewellery
  • Furniture

Why would you use a Trust?

Usually for tax planning purposes or to protect assets, but other reasons include:

  • Provision for persons with a disability
  • Passing assets on to minor children
  • Personal injury
  • Charitable purposes

 

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