A trust fund is a tool for future planning. It’s a legal third party entity. It’s usually set up to take care of a person’s assets on behalf of them (for example, if they are too young to handle their own affairs). You may even have heard the term trust fund on American TV – when an under-age (and often very wealthy) character is demanding access to their trust – this is what they’re talking about!
In order to set up and maintain a trust, you need three different parties:
There are three different types of trusts that you can set up. The one you choose depends on why you need it:
For some trusts, you might need to pay tax for the income you receive from it via a Self Assessment tax return
For other trusts (called discretionary trusts), all income received by you is treated as though it has already been taxed at 45% – you might be entitled to a tax refund if you’re not an additional rate taxpayer (if you earn under £125,140)
For comprehensive advice about the handling or setting up of a trust fund, contact our experts today. We can help you to find the most tax-efficient method of handling a trust fund and offer advice and guidance that works best for you.
Of course! We advise that you start a comprehensive spreadsheet to keep track of your taxable income and relevant expenses throughout the year in order to make your tax return more straightforward. This can be done on an Excel spreadsheet or Google sheet to keep things simple! Contact our team for more advice today!