KEY POINTS:
Kevin Peacock, manager of private wealth management at Guardian Trust, on protecting your assets in a trust.
What are the main advantages with setting up a trust?
By removing assets from your personal ownership and transferring them to trustees, you are protecting them from any claims which may be made against you personally - either during your life or after your lifetime. Some examples are the division of relationship property, particularly since the new provisions of the Property (Relationships) Act 1976 came into force, claims against your estate, tax savings and the protection of personal assets from business risk.
What control do I have over the trust?
A well-prepared trust deed will give you sufficient powers to ensure your trust can be managed so both your reasons for establishing the trust and your future wishes are properly secured. You can add and remove beneficiaries, specify who are to be the final beneficiaries, and change this during your lifetime or in your will, appoint and remove trustees, and say who will be able to do so after your death, if necessary.
Are there any circumstances in which my trust be overturned?
Trusts can be overturned under legislation that exists
to prevent debtors from hiding their assets from creditors. However, there are exceptions, such as where the property was purchased in good faith and if the full market value was paid.
What happens if I want to sell a trust asset - my home, for example?
If you transfer your home to the trust, it will become an asset of your trust. It is the trustees who can sell the property and purchase a replacement. Before any assets are bought or sold, it is important to seek professional advice on how to protect the integrity of the trust through the process.
Is it better to set up a trust in my will or during my lifetime?
It is often best to set up a trust during your lifetime when you want to ensure your assets are protected from unwanted claims, such as those that may arise when a family member disputes their entitlement under a will, or when you want to safeguard assets from business risk. Alternatively, you may wish to transfer assets to a trust after your death if the distribution of assets is fairly straightforward, such as to provide the ongoing support of young or special-needs children.
