Why consider a trust?

Trusts are an important way of holding assets. While some of the tax advantages they enjoyed previously have been removed by the 2006 Finance Bill, there are other reasons which make trusts a sensible option to consider.

• You can give away shares but still retain a measure of control by acting as trustee. In this role you are able to exercise any voting rights attaching to the shares, although you must do so for the benefit of the beneficiaries of the trust.
• A trust can enable the shares in a company to be kept away from individuals who might spend or devalue them although they can still benefit, for example, from the income that arises from the asset. It might also be important to protect assets from others. For example, shares given directly to a child might become the subject of a claim from their spouse in a divorce situation. Placing the shares into trust may avoid that problem.
• A trust can enable you to maintain some flexibility in relation to the underlying assets and can allow changes in benefit to take place without having to formally change the ownership.
• Sometimes it is difficult to anticipate now where you would want shares to go in the future. This that can lead to doing nothing at all! A trust allows a transfer of assets to be made without having to make a final decision as to the individuals who should ultimately benefit from them. This can allow the IHT benefits to arise to your own estate.