People set up trusts for all sorts of reasons including: to provide for the education of children and grandchildren, to provide for a spouse, to protect assets for the long term benefit, and to provide funds for charities.
A trust is a place where you put your assets to be held until they are transferred to the beneficiaries designated to receive them. A trust is considered to be a legal entity and therefore assets transferred to a trust become property of the trust.
It is important to seek the guidance of a professional trust advisor when setting up a trust because you will want to carefully consider how the trust will impact your personal situation and your Will.
A trust advisor can help you choose the trustees, the beneficiaries, how long the trust will be in force and when the assets will be transferred to the beneficiaries. Your trust advisor will also assist you in determining how the assets will be invested. This will be determined in light of the overall objectives of the trust. It is also a good idea to do an Enduring Power of Attorney as well.
Once it is set up you must decide how to transfer assets to the trust. This can be done in one of two ways. You can lend or gift assets to a trust. Gifting is the most common way of transferring funds to a trust. The Estate and Gift Duties Act limits the amount that can be gifted to a trust in a year before duty must be paid.
Because there are various tax and personal consequences involved in establishing a trust it is imporant to discuss your situation with a trust advisor.