How a trust fund can help provide for your children and save tax

A well-crafted trust fund can be highly effective in ensuring your children are financially provided for. The benefits of a trust fund for a child have been experienced by families over many centuries and they continue to help protect money and assets and provide funds for future generations

What is a trust fund?

A trust fund is created by transferring money, property or other assets to trustees with instructions to use that fund for the benefit of individuals who are called beneficiaries. You can set up a trust fund by:

  • making a will – the provisions of the trust will only come into effect when you die;
  • and/or setting up a lifetime trust to take immediate effect, or on a date you specify – this could, for example, enable your children to receive money during their university years.

The benefits of a trust fund for children

There are various ways that children can benefit through a trust fund. You can ensure a child or grandchild has a regular income while at university; money for a house deposit; or a lump sum to buy their first car. There may be cases where a child or dependent needs access to funds to support special needs, medical treatment, or for their daily living because they are unable to manage their own affairs. A trust fund can also protect your children from squandering their inheritance all at once or falling victim to unscrupulous people.

If you are a farm owner wishing to keep farming assets within the family, a trust fund could be an effective way to ensure land and property stays in the family for your children and future generations.

If you have children from a previous relationship, you might want to consider using a trust fund to ensure they are provided for in the event of your death, as well as your current spouse.

Your trustees will be responsible for managing the trust in accordance with your wishes and in accordance with the law.

Problems to consider

One consideration when setting up a trust fund should be the tax implications because trust tax can be very complicated. How tax legislation applies to your trust fund depends on the structure of the trust itself. At Warners, we have the expertise to advise effectively on the tax and other implications of your trust fund.

Choosing the right trustees is vital, as they need to take this role seriously. They should be mature, trustworthy and sensitive to changes in your family circumstances.

For further information about setting up a trust fund for your children, please contact Warners Solicitors on 01732 770660 or email [email protected].

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

Send us a message or call 01732 770660

    • This website is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply