Trusts Explained Keily Legal
Trusts Explained Keily Legal

Trusts Explained

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A Guide to Trusts and Estate Planning in Essex

At KEILY. we believe estate planning should be clear, practical and centred around the people who matter most.

Trusts are often misunderstood. Many people assume they are only for the wealthy, but in reality trusts can be an effective way of protecting family assets, providing for loved ones and ensuring your wishes are carried out in the future.

Whether you are making a Will, planning for future generations, protecting vulnerable beneficiaries or looking at inheritance tax planning, a trust may form an important part of your estate plan.

What Is a Trust?

A trust is a legal arrangement that allows assets to be managed by one person for the benefit of another.

There are three key roles:

The Settlor

The person who creates the trust and places assets into it.

The Trustee

The person responsible for managing the trust and making decisions in accordance with its terms.

The Beneficiary

The person, or group of people, who benefit from the trust.

Assets held within a trust may include:

  • Property
  • Savings
  • Investments
  • Business interests
  • Life insurance proceeds

Trusts are commonly used as part of Will writing and estate planning to provide protection, flexibility and peace of mind.

Why Use a Trust?

Every family is different. Every situation is different.

A trust can help to:

  • Protect assets for children and future generations
  • Provide for a surviving spouse or partner
  • Support vulnerable beneficiaries
  • Protect family wealth following remarriage
  • Control when beneficiaries receive an inheritance
  • Assist with estate and inheritance tax planning
  • Preserve family assets during periods of uncertainty

The right trust structure depends entirely on your personal circumstances and objectives.

Common Types of Trust

Interest in Possession Trust

An Interest in Possession Trust allows one person to benefit from an asset during their lifetime whilst protecting the underlying capital for another beneficiary.

This is particularly common in Will planning.

A Typical Example

A husband leaves his share of the family home into trust.

His wife continues living in the property for the rest of her life, but when she dies, his share passes to their children.

This arrangement can help:

  • Protect children’s inheritance
  • Provide security for a surviving spouse
  • Reduce the risk of assets being diverted away from the family

Interest in Possession Trusts are frequently used in second marriages and blended family situations.

Discretionary Trust

A Discretionary Trust gives trustees flexibility to decide how and when beneficiaries receive money or assets.

Unlike a straightforward inheritance, beneficiaries do not have an automatic right to receive funds.

Instead, trustees can make decisions based on circumstances at the time.

Benefits of a Discretionary Trust

  • Flexibility for changing family circumstances
  • Protection of assets
  • Potential tax planning opportunities
  • Support for younger beneficiaries
  • Assistance for beneficiaries facing financial difficulties

These trusts are often used where future needs are difficult to predict.

Vulnerable Person’s Trust

A Vulnerable Person’s Trust is designed to support someone who may not be able to manage their finances independently due to disability, illness or other vulnerabilities.

The aim is to provide financial security whilst protecting entitlement to certain means-tested benefits.

Benefits

  • Long-term financial support
  • Protection of assets
  • Flexible access to funds when needed
  • Potentially favourable tax treatment

Many parents and grandparents use these trusts to ensure a vulnerable family member remains protected throughout their lifetime.

Trusts for Children and Young People

Many parents do not feel comfortable with a child receiving a significant inheritance at age 18.

A trust can allow funds to be held until a later age, such as 21 or 25, whilst still allowing trustees to assist with:

  • Education costs
  • Housing deposits
  • Living expenses
  • Career development

This provides greater protection and flexibility for younger beneficiaries.

Understanding Trust Taxation

Trust taxation can be complex and should always be considered as part of wider estate planning.

Depending on the type of trust, taxes may include:

  • Inheritance Tax (IHT)
  • Income Tax
  • Capital Gains Tax (CGT)

Certain trusts may also be subject to periodic inheritance tax charges.

Because every trust is different, professional advice is essential before establishing a trust or transferring assets into one.

At KEILY. we work alongside accountants and financial advisers where appropriate to ensure trust planning is carried out effectively.

The Role of a Trustee

Choosing the right trustee is one of the most important decisions when creating a trust.

A trustee has a legal duty to act in the best interests of the beneficiaries and manage the trust responsibly.

Trustee Responsibilities

  • Managing trust assets
  • Making decisions fairly and impartially
  • Keeping accurate records
  • Communicating with beneficiaries
  • Complying with HMRC requirements
  • Registering trusts where required through the Trust Registration Service (TRS)

Trustees may be family members, friends or professional advisers.

The most important qualities are integrity, reliability and sound judgement.

Choosing the Right Trust

Trusts can provide valuable protection, but they are not a one-size-fits-all solution.

The most suitable trust will depend on:

  • Your family circumstances
  • Your assets
  • Your wishes for future generations
  • Any inheritance tax concerns
  • Whether there are vulnerable beneficiaries

Good estate planning starts with understanding what matters most to you and your family.

Trusts, Wills and Estate Planning with KEILY.

At Keily.legal, we help individuals and families across Billericay, Basildon, Brentwood, Chelmsford, Wickford, Rayleigh, Shenfield, Ingatestone and throughout Essex create estate plans that provide clarity, protection and peace of mind.

We advise on:

  • Trusts in Wills
  • Estate Planning
  • Asset Protection
  • Inheritance Tax Planning
  • Probate and Estate Administration
  • Lasting Powers of Attorney
  • Will Writing

Our focus is always simple:

Protecting your wishes.
Protecting your loved ones.
Protecting your legacy.

Speak to a Trust and Estate Planning Solicitor

If you would like advice on trusts, Wills or estate planning in Billericay | Essex and surrounding areas, we would be pleased to help.

KEILY.LEGAL

Your Family is our Family

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