What is a trust and how do they work?

A trust is a way of holding property and assets so that they are protected. A trust can be set up in your lifetime or under the terms of your Will.

Trusts are effective tools for inheritance and succession planning enabling you to make provisions for your family members and also retain a measure of control and flexibility. They also enable efficient distribution of assets to beneficiaries, without consuming the time and money associated with lengthy and complicated procedures and formalities required for probate.

To allow for maximum flexibility, most people establish a discretionary trust, which gives the trustee discretionary power to react swiftly to changed circumstances.

Trusts are an extremely effective vehicle to protect and hold family wealth. The control is with the trustees who use the funds for the benefit of the beneficiaries.  They can provide protection from the beneficiary himself (if he has personal problems) from attack on divorce and from creditors. So, they can be a very important and useful vehicle in holding family assets.

Creating the right type of trust to match your particular situation requires specialist help as there are many more variations.  Each trust has differing tax effects which must be considered and specialist advice should be sought.