A Comprehensive Guide To Trusts in the UK

Trusts are a powerful and versatile legal mechanism in the UK that allows individuals to manage, protect, and distribute their assets. For those interested in concepts like “Freeman on the Land” and lawful rebellion, understanding trusts can provide valuable insights into asset protection and autonomy within the framework of the law.

This comprehensive guide explores everything you need to know about trusts in the UK. We include the different types, their purposes, and how you can use them to safeguard assets from authorities, health costs, or inheritance tax.

What is a Trust?

A trust is a legal arrangement where a person (the settlor) transfers assets to another person or entity (the trustee) to hold for the benefit of a third party (the beneficiary). Trusts create a separation between ownership and benefit, which can provide significant legal and financial advantages.

The Purpose of a Trust

We create trusts for various reasons, including:

• Asset Protection: Safeguarding assets from creditors, legal claims, or unforeseen liabilities.
• Tax Efficiency: Minimising inheritance tax or capital gains tax liabilities.
• Estate Planning: Ensuring assets are distributed according to the settlor’s wishes.
• Care Costs: Potentially shielding assets from being considered in financial assessments for care home fees.
• Privacy: Unlike wills, trusts do not become public documents upon the settlor’s death.

Who Legally Becomes Part of a Trust?

1. Settlor: The person who creates the trust and transfers assets into it.
2. Trustees: Individuals or organisations responsible for managing the trust assets according to the terms of the trust deed.
3. Beneficiaries: The individuals or groups who benefit from the trust’s assets or income.
4. Protector (optional): A person appointed to oversee the trustees and ensure the trust is managed as intended.

Specific Types of Trusts in the UK

1. Bare Trusts
   • The trustee holds the assets for a beneficiary who has an absolute right to them.
   • Often used for minors until they reach the age of 18.
2. Discretionary Trusts
   • Trustees have discretion over how income or capital is distributed among beneficiaries.
   • Common in estate planning to provide flexibility.
3. Interest in Possession Trusts
   • The beneficiary has a right to income generated by the trust, but not the underlying capital.
   • Often used for family wealth planning.
4. Charitable Trusts
   • Created for charitable purposes and enjoy specific tax advantages.
5. Trusts for Vulnerable Persons
   • Designed for individuals who have a disability or otherwise vulnerable, offering tax benefits and financial protection.
6. Revocable Trusts
   • Can be altered or revoked by the settlor during their lifetime.
   • Rare in the UK due to limited tax benefits.
7. Irrevocable Trusts
   • Cannot be altered once established, providing strong asset protection.
8. Settlor-Interested Trusts
   • The settlor or their spouse can benefit from the trust, but these often have less favourable tax treatment.
9. Will Trusts
   • Created through a will and activated upon the settlor’s death.
10. Hybrid Trusts
    • Combines elements of different types of trusts to meet specific needs.

Can I Put Property in a Trust?

Yes, you can place property into a trust, which can:

• Shield Assets from Care Costs: While this is a common strategy, it’s crucial to act well in advance of requiring care, as authorities may scrutinise transfers made deliberately to avoid fees (known as deprivation of assets).
• Exclude Property from Probate: This ensures quicker and more private transfer of assets.
• Provide Tax Benefits: Depending on the trust type, inheritance tax liability may be reduced.

However, placing property into a trust has implications. For example, the trust may be subject to periodic charges or capital gains tax upon asset transfer.

Other Assets You Can Place in a Trust

In addition to property, other assets can be placed in a trust to protect them:

• Cash and Bank Accounts
• Investments (e.g., stocks, bonds)
• Businesses: Shares or interests in private companies can be held in trust.
• Art and Collectibles
• Life Insurance Policies: Policies written in trust ensure payouts go directly to beneficiaries and avoid inheritance tax.

Transferring Assets into a Trust

To transfer assets into a trust:

1. Draft a Trust Deed: This legal document outlines the trust’s terms.
2. Transfer Ownership: Assets must legally be transferred to the trustees.
3. Pay Any Taxes Due: Depending on the asset and trust type, taxes may apply (e.g., stamp duty, inheritance tax).

Wills vs. Trusts

While both are estate planning tools, trusts offer advantages over wills in certain contexts:

• Privacy: Trusts do not go through probate, unlike wills.
• Immediate Effect: Trusts can be effective during the settlor’s lifetime, while wills only take effect after death.
• Control: Trusts allow for more detailed and flexible management of assets.

How to Choose the Correct Trust

Selecting the right trust depends on your goals:

• Asset Protection: Consider discretionary or irrevocable trusts.
• Estate Planning: Interest in possession or will trusts might suit your needs.
• Tax Efficiency: Charitable or vulnerable person’s trusts may provide advantages.
• Avoiding Care Costs: Place assets in trust early, but seek legal advice to navigate deprivation of assets rules.

Preventing Authorities from Counting Assets

Placing assets in a trust can prevent them from being counted toward health costs or inheritance tax, but there are caveats:

• Deprivation of Assets Rules: If assets are transferred into a trust shortly before care is needed, they may still be included in financial assessments.
• Inheritance Tax: Certain trusts can reduce liability, but periodic charges or exit charges may apply.
• Professional Advice: Consult a solicitor or tax advisor to structure trusts effectively and ensure compliance with legal requirements.

Whatever You Do, Make It Watertight!

The Freeman Movement, never gives legal advice, of course. However, what we can say is that you need to protect yourself in whatever you do. Your assets and other interests represent a large part of your life, so you need to be one step ahead of the game.

Remember this, time equals money. We also say, “if you want money, you can’t have freedom, if you want freedom, you can’t have money.” However, if you have been productive in your life, you can bet that the greedy authorities, in all their forms, will be after your money and possessions.

You need to ensure that whatever you do, regarding your money and possessions, you do the correct thing for you. As always, everyone’s circumstances differ greatly, and only you will know what is best for you.

Because we live in a world that is not exactly what it should be and the tyrants and elite are after your money and possessions, we do recommend seeking advice from the legal profession. Their advice and service is not cheap, but they can help with your peace of mind. In many instances, we can do without them, but for novices, they are the best option, especially with trusts.

In Conclusion: Trusts in the UK

Trusts are a robust tool for managing and protecting assets in the UK. By understanding the types of trusts and their purposes, individuals can achieve greater financial security, privacy, and autonomy. For those exploring lawful rebellion or the “Freeman on the Land” philosophy, trusts provide a legal means to safeguard wealth and maintain control over your legacy.

As always, consult with a qualified legal professional to ensure your trusts are established correctly and serve your intended purpose. Those people know the legal jargon and can help protect your money and property, for a modest outlay, saving you time and money.