A recent paper from the Society of Trust and Estate Practitioners (STEP) has highlighted the social and economic benefits of trusts. The report acknowledged that for many people trusts are seen in a negative light, perhaps because they are seen as secretive or only used by the super-rich or those looking to hide something from the authorities.
Yet trusts have a long-standing tradition under English law and a Government consultation document in 2018 entitled Taxation of Trusts commented on how they were an intrinsic part of the UK’s legal system and had been in use for centuries. Indeed, it is thought that trusts as a concept can be dated back to the Middle Ages and gained more prominence in the 19th Century, through references in novels like Pride & Prejudice.
Other jurisdictions also have legal structures that are trust-like in nature.
Trusts have developed considerably over time and where initially they may have only held land, now they are increasingly used to hold other assets such as cash, shares or other valuable assets.
In fact, a considerable proportion of the UK population will actually be the beneficiary of a trust already, even if they are not aware of it, through the widespread use of trusts to hold pension funds and also charitable funds. Anyone owning property jointly with another will also have created a trust of land.
In reality, trusts cannot be used for the purposes of hiding assets in the way they are sometimes portrayed, nor do they have any automatic tax exemptions under UK law. Modern trusts are subject to strict requirements to identify all beneficiaries and there are already laws in place that govern or regulate tax planning.
In the second part of this blog, we will go on to look at some of the areas where trusts could be useful for families.
Colman Coyle has considerable experience in acting for trustees and beneficiaries or indeed people looking to set up trusts of their own. If you would like to discuss the issues raised here, please contact Patrick Green on +44 (0)20 7354 3000 or firstname.lastname@example.org.