How could you benefit from using a trust?
Trusts provide a useful way of managing assets when life becomes unsettled or when you are not around to protect them. Reasons to consider a trust can include control of assets, for example, where someone is too young, old or incapacitated to handle them personally and protection of assets in cases of marriage breakdown or business failure. There is also a compelling case for using a trust to protect individuals set to inherit large estates where, for whatever reason, it is decided they are unable to handle their wealth responsibly. Even in less turbulent times, trusts have a role to play in wealth management, from passing on assets to keeping them outside of death estates. This enables family members to have access to funds immediately on death to pay funeral expenses and taxes.
However, for many, the word ‘trust’ is a loaded one and conjures up images of them being the choice of tax evasion for ‘shady people in sunny places’!
The transparency of trusts
The recording regime for trusts has become more transparent in recent years. All trusts need to be registered on HMRC’s Trust Register, which requires details of, among other things, beneficial owners and trustees. Following the Fifth Anti-Money Laundering Directive (5MLD) which came into force in the UK on 10 January 2020, HMRC will be expanding the details to be recorded on the Trust Register, especially in relation to the beneficial ownership of trust assets, leading to even greater transparency. So with this assurance that there is no longer any clandestinity about setting up trusts, perhaps it is worth re-considering the role they could play to secure you and your family’s future?