Providing for the future with trusts In our experience many individuals do not consider establishing a trust as part of their tax planning even though it can be an extremely effective tool. This tends to be for one of two reasons: some individuals feel that settling a trust will be too complex when in reality it can be a relatively straightforward process. Alternatively, many have heard that trusts are only appropriate for passing on extreme asset but in fact many individuals establish trusts at sums at or below the Inheritance Tax (IHT) threshold (currently £325,000). There are many reasons why a trust may be suitable including, for tax-planning purposes, to protect assets, to provide privacy or to ensure the smooth transition of assets to beneficiaries on death and avoid lengthy probate proceedings. Whatever the reason, our trust experts can advise whether a trust is appropriate to meet these objectives and then work closely with your relationship manager to ensure that you achieve your aims. Some typical situations where a trust may be appropriate include: Helping the next generation Trusts are a useful tool in passing asset on to the next generation. Parents could set aside sums up to their combined nil rate bands to provide a nest egg for their children which could be used, for example, to assist in the purchase of their first property. By transferring this sum into a trust, the parents will start the ‘seven year clock’ for IHT purposes. Likewise, grandparents may want to provide for their grandchildren’s education by establishing a trust which could release funds to meet these future costs. Such trusts can provide directly for grandchildren whilst starting the ‘seven year clock’. They also ensure that assets are passed to grandchildren without becoming chargeable to IHT in their children’s estate first. Charitable Intentions Charities are a part of every society. The word “charity” is derived from a Latin word “caritas,” meaning care. In ordinary term it means no more than generosity to the poor and needy. The legal meaning of word is much wider. It incorporates other purposes for the benefit of the community as a whole. Charitable Trust is a significant area of law in the United Kingdom, as charitable trusts enjoy some advantages over other trusts. Above all, UK charities do not pay income tax on their investment income devoted solely to charitable purposes under s505 of the Taxes Act 1988. Charitable trusts do not pay capital gains tax on the disposal of assets provided they are devoted to charitable purposes only, under s256 of the Taxation of Chargeable Gains Act 1992. However, charities are required to pay Value Added Tax on goods and services purchased. The problem with the law on charities is that it does not define “charitable purposes.” If you would like to leave some of your asset to a good cause, St Josephs are happy to help and advise you on the matter. Protecting young and vulnerable beneficiaries A trust can be used to ring-fence sums for individuals who may not be in a position to receive the assets outright perhaps because of their age or personal situation. Flexibility Trusts can also be used in some insurance based arrangements to provide IHT benefits and flexibility for individuals who wish to settle money on trust but retain some access to part of the funds. Services we provide: • Establishing the trust including preparing the deed • Regular meetings with co-trustees to deal with administrative matters and advising on management and investment of the underlying assets • Making distributions to beneficiaries • Monitoring investment reports • Dealing with all administration, accounting and tax reporting Advantage of using St Joseph’s St Joseph’s has over 20 years’ experience of establishing and managing trusts that meet the needs of healthy asset individuals and families. Continuity in a trust’s management is important and so St Joseph’s is often appointed as Trustee because of its longevity and experience. In addition, surrounded by a wealth of knowledge within the organisation, you can rely on our experts to provide an extensively researched investment management service that follows a very clear purpose.