Trusts

Trusts

Do you need assistance managing your money so it can be used to help someone after you die or to contribute towards your care in later life? A trust is a great way to do this.

What is a Trust?

Imagine asking a friend to look after some of your money so that it could be used to pay for your care if you fell ill or have an accident. By just giving the money to your friend, the friend would be the trust property, and you would be the beneficiary (the person who benefits from the trust). You can put assets, investments or just money into a trust. There a variety of ways that trusts may have to pay taxes, depending on what type of trust it is.

A trust is a legal arrangement in which one or several people, or a company controls the money or assets which must be used for the benefit of the beneficiaries.

When Might You Use a Trust?

A trust may be set up to:

• Support a person that cannot manage their own money in order to ensure their needs are catered to.
• Ensure that your money is used to look after you if and when you cannot look after yourself.

Trusts are particularly useful for people with a child that has a mental health condition or learning disability who are worried about supporting their child financially after they die.

Trusts are also of use to people with a mental health condition or learning disability themselves and claim state benefits such as Disability Living Allowance (or Personal Independence Payment), or receiving money from their local social services department.

Benefit payments can be made to the trustees, and they will use them according to the rules set out in the trust.

Choosing Trustees

When you set up a trust you also have to decide who will act as the trustees. For many people their trustees will generally be family members or close friends who can be relied upon.

Take the time to carefully consider who to ask, and ensure they're totally happy to accept the responsibility. You should seek to have two trustees at least, and usually no more than four in total.

Alternatively, you can appoint a company as your trustee, for example a bank or a solicitor firm, however you should keep in mind they will charge you for this.

How Does Your Local Authority Treat Your Trust Income and Capital?

If you require long-term care and you are the beneficiary of a trust, your local authority will take into consideration the total income and capital you're entitled to when they carry out an assessment of your finances for their support. How the local authority treats the money you have in the trust will depend on the terms of the trust.