A Guide to Trusts: Understanding The Types and Potential Benefits for Your Estate
25th March 2025
Trusts are valuable legal tools that help individuals manage and protect their assets. Whether your goal is to preserve your wealth, maintain privacy, or provide for loved ones, trusts offer many benefits and can be customised to fit your needs.
At Myers & Co, we specialise in guiding clients through the complexities of trust and estate planning to ensure their assets are well-managed and their wishes are respected. Sue Hall, Director and Head of Wills and Probate at Myers & Co, explains the different types of trusts and their advantages.
What Are the Common Types of Trusts?
Trusts come in various forms, each designed to address specific needs and preferences. Understanding the different types of trust can help you make informed decisions about your estate planning. Here are a few common types of trusts:
- Life Interest Trusts: A Life Interest Trust allows a beneficiary to receive income from the trust assets or use the property held in the trust during their lifetime. Upon their death, the assets are passed to other beneficiaries.
- Discretionary Trusts: With a Discretionary Trust, the trustee has the discretion to decide how and when to distribute the trust’s assets to the beneficiaries. This type of trust is useful for providing for beneficiaries who may not be able to manage the assets themselves.
- Bare Trusts: A Bare Trust, also known as a simple trust, gives the beneficiary absolute rights to the trust’s assets and income. The trustee holds the assets in their name but acts according to the beneficiary’s instructions. This arrangement provides legal protection, administrative convenience, privacy, control, and potential tax benefits.
- Interest in Possession Trusts: Interest in Possession Trusts grant a beneficiary the immediate right to receive income from the trust assets or enjoy the property held in the trust. The beneficiary is known as the life tenant, and the assets are passed to other beneficiaries upon their death.
- Charitable Trusts: Charitable Trusts are established to benefit charitable organisations. They can provide significant tax advantages while supporting philanthropic goals.
- Protective Property Trusts: Protective Property Trusts are designed to protect a share of a property for specific beneficiaries while allowing a surviving spouse or partner to live in the property during their lifetime.
What Are the Benefits of a Trust?
Trusts offer numerous benefits, including:
- Asset Protection: Trusts can protect your assets from creditors and legal claims. By transferring ownership of your property to a trust, you can shield these assets from potential lawsuits or financial troubles that may arise in the future.
- Tax Efficiency: Certain types of trusts can provide tax advantages, reducing estate and inheritance taxes. For example, an irrevocable trust can remove assets from your taxable estate, potentially saving substantial amounts in taxes upon your death.
- Privacy: Trusts help maintain privacy by avoiding the public probate process. Unlike wills which are public records, the terms of a trust and its assets remain confidential, ensuring privacy for you and your beneficiaries.
- Control: Trusts allow you to control how and when your assets are distributed to beneficiaries. You can set specific terms and conditions for distributions, ensuring that your assets are managed according to your wishes.
- Flexibility: Trusts can be tailored to meet specific needs and circumstances. They can accommodate a wide range of scenarios, such as providing for minors, individuals with special needs, or managing business interests.
What’s the Right Trust for Me?
Selecting the right trust depends on your individual goals and circumstances.
Factors to consider include the type of assets you have, your tax situation, and the needs of your beneficiaries. Consulting with our Wills and Probate specialists can help you determine the best trust for you and your family’s estate planning needs.
How Can Myers & Co Help?
Ultimately, the variety of trusts available cater to different estate planning needs. Each type of trust comes with its unique advantages, designed to meet specific goals and circumstances.
At Myers & Co, we provide comprehensive trust and estate planning services. Our experienced team can help you navigate the complexities of setting up and managing trusts, ensuring your assets are protected and your wishes are fulfilled. For further information please contact Sue Hall, Director and Head of Wills and Probate at Myers & Co, on 01782 491025 or email sue.hall@myerssolicitors.co.uk. Myers & Co has offices in Stoke-on-Trent, Staffordshire
