Articles

Published by: Hannah Borner

Gifting assets into Trust

Many people are keen to pass assets and wealth to their families, but worry that the assets they give away will be used unwisely. By gifting assets into Trust, you can reduce the value of your Estate for Inheritance Tax (provided you survive the gift by seven years), whilst also retaining control of those assets. 

If assets are gifted outright, the recipient can decide what to do with them, during their lifetime and after they have died. Assets might not be used as you intend, or could pass to beneficiaries outside your family following the death of the recipient.

If assets are instead gifted into a Discretionary Trust, they will remain under the control of the Trustees (who can be the people who set up the Trust) until they decide to pass assets to a Beneficiary outright.

Assets which are held in a Discretionary Trust do not form part of the Beneficiary’s Estate when they die, and so will not pass in accordance with the Beneficiary’s Will (or the intestacy rules). Instead, they remain in the Trust until they are distributed at the discretion of the Trustees.

If assets are gifted into a Life Interest Trust, the income produced by the assets held in the Trust is mandated to the Beneficiary, but the capital value remains in Trust until the ‘Life Interest’ of the Beneficiary comes to an end (either on death or another specified event).

A chosen Beneficiary can benefit from the Trust assets during their lifetime (such as living in a house rent free), but the person who establishes the Trust can stipulate who will receive that assets when the Life Interest comes to an end, thereby retaining control over who will ultimately receive the gifted assets.

Assets held in Trust do not belong to the Beneficiaries outright and may therefore offer protection in the event of financial or matrimonial difficulties which a Beneficiary may face.

Taylor Walton can advise on Trusts, and prepare the relevant documents to create a Trust.

If you think that a trust may help you, contact Hannah Borner on 01727 845245 or hannah.borner@taylorwalton.co.uk.