What is a trust?
A trust is simply a legal relationship created when one person is given property to hold for the benefit of another. If you use a standard Scottish Widows form, the trust will be written down in the form of a deed.
There are three categories of people involved in a trust (there may be more than one of each):
- the settlor who establishes the trust and/or provides the trust property
- the beneficiary is the person or class of person who will or may benefit from the trust property
- the trustee who holds the trust property under the terms of the trust for the benefit of the beneficiary.
There may also be a trust protector. The protector’s role ensures that before trust capital is distributed the trustees are aware of the settlor’s wishes and the circumstances of all of the beneficiaries.
Once the trust is established, its terms cannot be ignored. The settlor is no longer the legal owner of the trust property and the rights of the beneficiary are protected by law.
Why are trusts created?
Trusts are created for many different purposes but research conducted for HM Revenue & Customs (HMRC Research Report 25: December 2006) showed that there are two main reasons:
1. To have the ability to control assets; for example,
a) passing assets to children or grandchildren at the appropriate time
b) ensuring that assets do not pass outside the immediate family
2. As part of financial planning arrangements to protect family wealth against taxation.
A trust of a life insurance policy may be created simply to ensure that the proceeds of the policy can be paid to the surviving trustees as quickly as possible on death, provided the trust is valid and will not require sight of a grant of representation (or confirmation in Scotland).
A trust will normally be more confidential than the provisions of a will, which ultimately becomes a matter of public record.
Scottish Widows trusts
Each trust has been designed to fulfill multiple purposes - enabling you to provide your clients with solutions whatever their specific objectives or estate planning requirements.
- Choice of investments
- Choice of fixed or flexible trusts
- Choice of single or joint settlor
- A wide range of support material including draft suitability paragraphs, completion guides and servicing deeds
- A protector option with our flexible trusts to add an extra level of control
To find out more about the features and benefits of each trust, please click on the links below: