Trusts

The Benefits of Trusts & Loans

The Risks!

Disinheritance
Increased estate value for Inheritance Tax
Inheritance completely attack-able from marriage after death, divorce, bankruptcy and care.
Funds can be easily wasted by spendthrift beneficiaries.

What is a Trust and what benefits can it provide?

A Trust is a legal relationship which is created when you as a settlor transfer assets to two or more people (the trustees) with instructions that they hold the assets for the benefit of your loved ones (the beneficiaries).
To achieve this, the Trust separates the legal ownership of the asset or property from the beneficial ownership.
The legal ownership of an asset is given to the trustees who are bound by the terms and conditions of the Trust deed and subject to general Trust law. It is their duty to hold and administer the Trust property in the best interests of your chosen beneficiary(ies), who will ultimately benefit from it.
As a result of the trustees owning the Trust property, these assets are then not deemed to be part of your loved ones estate(s).
So these Trust assets, managed properly, would not be subject to any claims on your beneficiary(ies).
Trusts can significantly reduce the impact of Tax on future generations.

The risks of full distributions

If your spouse or partner remarried after you died and you left them all of your assets, then the new spouse may inherit everything. The possible result is that your children may inherit nothing, as the new spouse could leave it to their own family and disregard any step-family.
If your children are going through divorce or separation then they may lose half or more of their estate(s) including anything you may have left them.
Similarly if your children are subject to creditor claims they could lose everything

"We are experts in providing advice on all aspects of Tax Planning and with the use of Trusts, will provide these ultimate Tax savings. contact us today for FREE no Obligation Chat"

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Can Trusts reduce or eliminate the Tax I pay?

Trusts are also subject to Tax, but appropriate management by the Trustees ran reduce any amount due substantially.
Trusts can significantly reduce the impact of Tax on future generations.
Trusts have been instrumental in mitigating Tax since Medieval times. Trusts were initially created for the Nobility and wealthy landowners to avoid paying taxes to the Crown.
The introduction of Trusts led to a distinct loss of Tax Revenue and it did not take long for the first Anti-avoidance Statute to be introduced by Henry VIII in 1535.
Since then, there have been many changes to Trusts and their uses and equally to the Inland Revenue Rules which affect them.
Nowadays, you don’t have to be a Nobleman or a wealthy landowner to want to take advantage of the many Tax strategies Trusts can provide.
Many people now look to using Trusts as a means of mitigating Tax which would otherwise be payable.
There are four types of Tax which could affect you and your estate:

Corporation Tax

Corporation Tax is paid by limited companies on their profits.
Corporation Tax is not payable by the self-employed but does apply to the following organisations, even if they are not limited companies:
Members' clubs, Societies and Associations
Trade Associations
Housing Associations

Groups of individuals carrying on a Business but not as a Partnership, e.g.Co-operatives.

There are two rates. The two rates of Corporation Tax — the small companies’ and main rate relate to a level of profit. When a company’s profit level changes from the small companies’ rate to the main rate, marginal relief is available to ease the transition.

Income Tax

Income Tax is a Tax on income. Not all income is taxable - and you’re only taxed on ‘taxable income’ above a certain level. Even then, there are other reliefs and allowances that can reduce your Income Tax bill - and in some cases mean you have no Tax to pay.

Taxable income includes:

Earnings from employment.
Earnings from self-employment.
Most Pensions income (State, Company and Personal Pensions).
Interest on most savings.
Income from shares (dividends).
Rental income
Non-taxable income

There are certain sorts of income that you never pay Tax on. These include certain benefits, special pensions and income from Tax exempt amounts. These are ignored altogether when working out how much Income Tax you may need to pay.

So whether you own your own business and your concern is Corporation Tax, own property or hold other forms of assets which would fall prey to Capital Gains Tax, or believe Inheritance Tax will become an issue for your intended Beneficiaries, we can provide you with the correct type of Tax Planning to ensure as much Tax as possible is saved.

Capital Gains Tax (CGT)

CGT is a Tax on capital ‘gains’. If, when you sell or give away an asset, it has increased in value, you may be taxable on the ‘gain’ (profit). This doesn’t apply when you sell personal belongings worth £6,000 or less, or, in most cases, your main home.

You may have to pay CGT if, for example, you:

Sell, give away, exchange or otherwise dispose of (cease to own) an asset or part of an asset.
compensation for a damaged asset.

You don’t have to pay CGT on:

Your car
Your main home - provided certain conditions are met.
ISAs or PEPs.
UK Government Gilts(Bonds).
Personal belognings worth £6000.00 or less when you sell them.
Betting, lottery or pools winnings.
Money which forms part of your income for Income Tax purposes.

These are some points to bear in mind:

If you are married, or in a civil partnership and living together and living together, you can transfer assets to your husband, wife or civil partner without having to pay CGT.

You can't give assets to your children or others or sell them cheaply without having to consider CGT.
If you make a loss you may be able to make a claim for that loss and deduct it from other gains, but only if the asset normally attracts CGT for example you cannot set a loss on selling your car against gains from disposing of other assets.

If someone dies and leaves their belogings to their Beneficiaries, there is no CGT to pay at that time - however, if an asset is later disposed of by a Beneficiary, any CGT they may have to pay will be based on the difference between the market value at the time of death and the value at the time of disposal.

"We are experts in providing advice on all aspects of Tax Planning and with the use of Trusts, will provide these ultimate Tax savings. contact us today for FREE no Obligation Chat"