Tax & Trusts

Tax & Trusts

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Why are Trusts set up?

Trusts can be set up for many reasons, for example they may be set up to:


  • protect your assets
  • provide for someone who is too young to manage their affairs
  • provide for someone who is incapacitated and cannot manage their affairs
  • minimise your Inheritance Tax liability


By putting assets into trust, you can take them out of your estate for Inheritance Tax purposes, provided specific requirements are met. Trusts can be used as part of Estate Planning. 

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Setting up a Trust

Trusts can be set up during your lifetime or written into your Will. 


When setting up a trust the person who puts the assets into the trust is known as the 'Settlor'. The settlor will decide who they wish to benefit from the trust, these are known as the 'Beneficiaries' and who they wish to appoint as 'Trustees', these are the people who are responsible for managing the trust. 


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Types of Trust

There are different types of trust. Some of the main types are as follows:


  • Bare Trusts
  • Interest in Possession Trusts
  • Discretionary Trusts 
  • Accumulation Trusts 

Bare Trusts

With Bare Trusts the assets are held in the name of a trustee. However, the beneficiary has an absolute right to the capital and income of the trust if they are 18 years old or over (in England and Wales).

Interest in Possession Trusts 

These provide for the person or persons with the interest in possession to have the immediate right to the income (after expenses).   

Discretionary Trusts 

Discretionary Trusts provide flexibility. The trustees have discretion as to how to use the income and sometimes the capital. What trustees can do depends on the Trust Deed, usually they will be able to decide which beneficiaries to provide for and how often to make provisions. 

Accumulation Trusts 

The trustees have the power to accumulate the income and add it to the trust's capital. Trustees may also be able to pay income out at their discretion. 

The Taxation of Trusts

Different types of trusts are taxed differently. When considering which type of trust to use it is necessary to consider the tax implications, such as Capital Gains Tax, Inheritance Tax and Income Tax.


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How We Can Help

Whether you are thinking of setting-up a new trust or would like advice on an existing trust, we have the expertise to advise you.


The combination of our legal and tax knowledge, together with our dedicated approach sets us apart. We will take the time to listen to you, understand your aims and provide expert advice tailored to your circumstances. 

Make an Enquiry 

If you have a question or would like more information, please do not hesitate to contact us.


Call us on 01623 857 207, email: info@asquithmanners.co.uk or complete our online Enquiry Form.   

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