Trusts are a legal agreement where a trustee holds and manages assets on behalf of the beneficiaries. They are often used for estate planning and asset protection. Here we share five different types of trusts, so you can choose one that best suits your needs.
1. Bare Trusts
A bare trust is simple – the beneficiary has an immediate right to the assets and income. Beneficiaries can be minors or adults who will take full control when they reach a specified age. This type of trust is often used for straightforward inheritances or gifts.
2. Interest in Possession Trusts
In an interest in possession trust, a beneficiary has the right to receive income generated by the trust assets but not necessarily the assets themselves. Beneficiaries can include spouses or children who benefit from regular income during their lifetimes.
3. Discretionary Trusts
Discretionary trusts give trustees flexibility to decide how and when to distribute income or capital. Beneficiaries do not have fixed entitlements, allowing the trustee to adjust distributions. If you’d like to learn more about how a discretionary trust could help you, use a London law firm, like //www.forsters.co.uk, to advise you.
4. Trusts for the Vulnerable
These trusts are designed for people who need protection or ongoing financial support, such as minors, people with disabilities, or those unable to manage assets themselves. Trustees make sure that funds are used for the beneficiary’s benefit without affecting government support eligibility.
5. Settlor-Interested Trusts
In settlor-interested trusts, the person who creates the trust can also benefit from it.