Trusts are made when the owner of a particular asset, who is called the settlor, wants to legally transfer their ownership into a trust. They are commonly used to specify how property is held when there are joint owners but other assets can also be transferred.
These deeds are also known as declarations of trust and may seem like a complicated affair but with the right deed of trust information, they can be extremely useful.
If you are thinking about whether this kind of legal arrangement could be useful to you, then here are the answers to some of the most commonly asked questions about deeds of trust.
1. How is a trust created?
Assets are legally transferred into the trust, which is then administered by trustees according to the wishes of the settlor and terms set out in a trust deed. This will benefit the beneficiaries of the trust.
2. What can be put in a trust?
Property is a common asset that is put into a trust but it is not the only thing that can be transferred as part of this legal process. Other assets may include land, cash, securities, pensions, life insurance, investments, personal items, luxury assets such as cars and yachts, and shares.
3. Does a solicitor have to set up the trust?
It is normal practice to get a professional to draft the trust deed and establish the trust. They can also act as a trustee.
There are many ways to find a professional to set up a trust, especially in the age of the internet, but you should always choose a reputable and suitable experienced solicitor. A further option if you need to find a trust lawyer if you don’t have one already is through the service offered by the Law Society in the UK. You can find out more about this here.
4. Do you have to have an independent trustee?
Trustees are responsible for managing the trust, including paying taxes, banking, and making distributions. You don’t have to have an independent trustee but it is good practice as it prevents prejudice or bias that can occur if friends or family act as sole trustees.
If you do choose to have an independent trustee, however, it is vital that you make sure that they understand the role and responsibilities. This is why many people choose to use a professional trust service provider. There is also advice on choosing a trustee on the Forbes website..
5. Do you need a protector?
You don’t have to have a protector but it can be very useful to ensure that the required duties are performed by the trustees. The protector is normally a professional adviser or someone close to the settlor.
6. Why do you need a trust deed?
The trust deed is a legally binding document and is at the centre of any trust arrangement. It protects the interests of all parties and governs the actions of the trustees.