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tax & trust planning

for your financial security

A little forethought pays dividends when it comes to trusts and taxes. We can help you plan ahead to ensure your assets are handled correctly, saving your loved ones stress and money when you pass away

Your estate is subject to tax – just like any other earnings you build up during your lifetime. However, you can reduce the amount of money that’s taken out of your estate pot by the taxman with a carefully planned trust. Forethought can help…

things to think about…

understanding trusts

There are four types of tax which could affect you and your estate:

  • Corporation Tax
  • Capital Gains Tax
  • Inheritance Tax
  • Income Tax

Without a plan in place, your loved ones could end up missing out. That’s where a trust comes in.

A trust is an obligation binding a ‘trustee’ (a chosen person) to deal with ‘property’ (assets/items of value left behind) in a particular way, for the benefit of ‘beneficiaries’ (the people who inherit these assets).

A trust can be created through a will, but can also be set up by someone else if a person passes away without a will.

Forethought can offer all the advice you need on trusts. Simply get in touch with our team to find out more.

the different parts of a trust

Trustees are placed in charge of a trust. Responsibilities include:

  • Notifying the Inland Revenue that tax is due
  • Keeping records of the income and capital gains of the trust
  • Completing and sending back any tax return issued to you
  • Paying any tax due on the income or capital gains of the trust

The property of a trust can include:

  • Money
  • Investments
  • Land or buildings
  • Other assets, such as paintings

The cash and investments held in the trust are also called the ‘capital’ or ‘fund’ of the trust. This may produce income, such as interest or dividends, whilst land and buildings may produce rental income. The way income is taxed depends on the type of trust.

A beneficiary is anyone who benefits from the property held in the trust, either through income, capital or both.

A settlor is a person who puts property into a trust, either during creation or at a later date.

the different trusts available

A bare trust, also known as a ‘simple trust’, is where a beneficiary can claim property immediately.

This type of trust exists when a beneficiary, known in this case as an ‘income beneficiary’, has a current legal right to the income from the trust as it arises.

In discretionary trusts, the way property is passed down is up to the discretion of the trustee. They decide payments and their regularity, for example.

With an accumulation and maintenance trust, the beneficiaries will become entitled to property when they reach a certain age (no more than 25).

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