What are Absolute Trusts?

A trust is a legal obligation binding a person (which can be an individual or a company) called a 'trustee' to deal with assets, or 'property' in a particular way, for the benefit of  those who are to receive the assets, know as 'beneficiaries'.

More specifically an Absolute Trust, or as its sometimes known ‘bare trust’, is one where the beneficiaries have an absolute interest. The sole duty of the trustee is to hold the property for the beneficiary and transfer it to the beneficiary, when required.

Life policies can be assigned into a trust. This is done by a deed whereby the policyholder assigns the policy to trustees for the benefit of the beneficiaries. Usually, the assignment is for inheritance tax purposes.

 

What are the types of Absolute Trust?

There is only one type of Absolute trust.

 

Why should I hold my investments in an Absolute Trust?

Holding money investments in a trust has a variety of uses

  • To ensure that the money you hold in a trust is left to those whom you wish to benefit from it.
  • For convenience, for example, if the beneficiaries are minor children and cannot deal with the property properly at this point in time.
  • For Protection, if the beneficiaries are to be someone who is mentally incapable or the donor does not wish the beneficiaries to take the capital at too young an age.
  • To mitigate some form of taxation, usually inheritance tax.
  • To pass property on to future generations but enable the settler to retain some control over it by being a trustee.
  • To allow a claim under a life policy to be dealt with a quickly as possible.

 

How do I assign my investments into an Absolute Trust?

The first and most important step after you have decided you may want to hold your investments in an absolute trust is to have a discussion with us to provide you with independent financial advice.

Once we have agreed what the most suitable type of trust for your particular circumstances we make an application on your behalf to place into a trust, the property, or assets that you wish to hold. This application must be signed by all settlers, trustees and beneficiaries. The signatures must also be witnessed by an  independent person.

 

Want to know more?

Talk to one of our qualified financial advisers on 01553 777600 or e-mail us at enquiries@ringassociates.co.uk

Also you may want to read the articles and associated links

Her Majesty’s Revenue and Customs

(http://www.hmrc.gov.uk/pdfs/ir152.htm)

Direct.gov.uk

(http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/InheritanceTaxEstatesAndTrusts/index.htm)