British trust law has the credibility of a long, fascinating history date back to the feudal times of the 12th century. Initially, trusts we generally used for managing ‘will monies’ and to create family settlements. Of late, “trust” has turned to be an umbrella term for various financial frameworks. It is destined to let citizens protect assets, distribute earnings. In general, a family trust fund helps in managing wealth both for the present and future generations. Though trusts were initially associated with millionaires and magnates, trusts are beneficial for middle-class families as well.
What Is a Trust Fund?
In principle, trust has been defined as a very simple and easy concept. It is a private legal arrangement. In the arrangement, the proprietorship of someone’s assets like cash, stock shares real estate, or even artwork is transferred to a private fund. Key people in the trust fund are:
- Settlor – An individual or a group of individuals manage assets to benefit the trust members. In the family trust fund, the person who provides the assets is usually called the settlor.
- Trustees – Those employed to take care of the assets are known as trustees. Those
- Beneficiaries – Beneficiaries are those who receive disbursements from the trust
On assets are assigned to the trust, in many cases, these asses are no longer are considered personal possessions of the settlors. Thus, they are protected from creditors even in case of bankruptcy, family disagreements, financial setbacks, lawsuits. So, trusts are widely considered as a ‘safe heaven’ arrangement for a family trust fund or business assets.
Why Create a Trust?
Trusts are believed to serve various needs. The main reasons for choosing them are somewhat endless. Here is why creating trust is important for you and your business.
- Estate and inheritance
- To control and protect family assets
- To protect assets possibly the number-one motive
- Trusts are good options in case the person is too young (or incapacitated) to manage his own financial affair
- To provide protection to ”spendthrifts” from their own lack of control
- The option is also available for managing and distributing management and distribution of pension or retirement funds during the term of an individual’s employment
What are Popular Types of Trusts?
Different types of trusts are available in the UK. because of the fact that trusts function as legal tools for multipurpose, they take many forms. That’s why trust has been defined in different types. Find here meaningful information about trusts and family trust funds. Each type of truss come with their own specific purposes and objectives.
Bare Trusts – Bare trust is simple trust. It is assets or property in this form. These assets are held in the name of a trustee who has no discretion over what income is paid to the beneficiary and has no active duties to perform.
- Discretionary Trusts – Discretionary Trusts provides the trustee with discretion over distributions from the trust.
Interest in Possession Trusts – this type of trust provides you with the right to the present enjoyment of something. That’s why the trustee is required to pass on all trust income to the beneficiary when it arises.
I hope, the above information helps you understand the family trust fund. If you have any queries, Write Us