Trust funds have been around for a very long time but are starting to become less common and something that a lot of people simply aren’t aware of. So, what is a trust fund? Jonathan said, “the origin of trusts are that they were used for estate planning and asset protection, the usefulness and flexibility of trusts have proven the test of time, the actual origin of them were found in the 11th century when in the Crusades.” Jonathan went on to discuss trusts in more detail and explained why they are still incredibly effective.
A common misconception of trusts is that they’re just for the very wealthy, Owen mentioned that “this is not the case because the inheritance tax threshold is so low.” Having a trust can be beneficial in so many ways, there are also many different types of trusts, as Jonathan went on to discuss.
An example of a specific trust is for bereaved minors, Jonathan said, “these are for a child (under 18 years) who has lost one parent, you can create a trust under a will or the rules of intestacy as there isn’t a 10-year anniversary charge on trusts of this nature.”
Another example is Bare Trusts (sometimes known as an absolute or fixed interest trust) is the simplest form of trust, that enables you to transfer assets to a small group of people. Bare Trusts are most commonly used to make a gift to a child, but anyone can be named as a beneficiary of a Bare Trust. However, once they have been named, neither you nor your appointed trustees can change who is entitled to the assets.
These are just a couple of the many different types of trusts, each of them having their own benefits and drawbacks which Jonathan discusses in more detail on this edition of The Business Brunch.
In his book “Equity and Trusts” by Alastair Hudson, Hudson wrote of this painting: “If you find any area of law to be dry, then just visualise the faces of the people involved in the conflict. In Orchardson’s painting, we can see the first moment of conflict between a rich couple; she is leaving the room with her head held high, probably as a result of an argument; he is left in front of the fireplace with a look of vexed confusion on his face. It is likely that a wealthy couple of this sort will have had their property held on the terms of a complex family trust. There will always be a moment when a marriage starts to crack and so begins the slow slide towards litigation.”