Family Trusts, why you should up a trust fund!

Your Free Guide to setting up a Family Trust

  • How to Protect your Assets.
  • Take control of Long Term Care Planning.
  • Mitigate Inheritance Tax.
  • De-Risking your Business Affairs.
  • Gain Protection from Creditors.
  • Reduce Probate Costs.
  • Ensure your wishes are not Ignored.
  • Protecting those with Special Needs.

The only certainty in life is change. Change can threaten your financial wellbeing – so improving the stability of your assets (private or business) ought to form the bedrock of your financial planning.

  • Do you want to mitigate financial and taxation risks?
  • Do you want more control over your property assets?
  • Is protecting your business assets from creditors a concern?
  • Would you like to pass shareholdings, tax efficiently onto your family and retain some control?
  • Would strategies to help mitigate the implications of growing old and funding your long term care be useful?

Family Trusts Explained

A trust is made when one person gives property to another person. The settlor gives the property to the beneficiary.

  • The Settlor (you) gives the property or assets away, today while you are alive.
  • The Trustees (can be you) ensures the rules of the trust are abided by.
  • The Beneficiaries receive the benefits of the trust. Usually your family members.

Family Trust Example

Alec and Susan are married and own a property worth £500,000. They both wish their daughter Alice to benefit from the property when they are both deceased. They are concerned if they both lose mental capacity they won’t be able to manage their assets so would like to gift the property now, but still remain in the property and use it as the family home.

Using a family trust, Alec & Susan (Settlors) give the property to their daughter Alice (Beneficiary), they appoint themselves as (Trustees) along with a solicitor to help administer the trust.

Family Trusts FAQs

Can a Family Trust protect me from Bankruptcy?

Once you have settled assets into your family trust they are usually protected from your creditors, this is useful if you run your own business as potentially the assets in the trust fund would be ring-fenced from bankruptcy.

Will a Family trust avoid Care costs?

NO! You cannot set up a trust to avoid care costs. However, assets placed into a family trust no-longer belong to you, therefore potentially would not form part of your estate for when calculating long-term care benefits. This is a complex area and each case must be accessed on an individual basis.

Can a Family Trust help with Inheritance Tax?

Yes, assets placed into a family trust no-longer belong to you, therefore potentially would not form part of your estate for inheritance tax purposes. This is a complex area and each case must be accessed on an individual basis.

What Assets can I put into my Family Trust?

Most people place their property into a family trust, you can also hold, cash, investments and shares from a private limited company you may own and other business assets.

Who will be the Trustees?

We usually advise to appoint a professional solicitor to help with the administration of the trust on your death, you can appoint family members or friends and yourselves as trustees to maintain control.

What if I want to Sell, Move or Downsize my Property held in Trusts? Can I still live in my property?

You can do all of the above, Family Trusts are very flexible.

Can I change the Trustees & Beneficiaries?

Yes. At any time.

Can I place Life Insurance and Pension polices into Trusts to avoid them becoming part of my estate?

Yes, not in a family trust, we can set up a pilot trust for you.

Before you Decide?

In setting up a Family Trust you should consider carefully the following:

  • Loss of ownership, you do give your assets to the trustees, you can still retain some control by either appointing yourself as trustees and retain the right to add or remove trustees.
  • There are costs involved in establishing the trust and possibly on-going costs to administer the trust fund.
  • Future law changes may reduce the effectiveness of using a family trust.

Who should have a Family Trust?

  • If you want complete certainty of who will inherit your assets.
  • If you wish to leave assets to those with special needs.
  • Business people with substantial borrowings who are at risk from claims from creditors who own their family property out-right.
  • Individuals with substantial inheritance tax issues.
  • If you are in good-health, have no requirement for immediate care funding, but want full control in the future over your property and possible applications for means-tested benefits.


The Next Step?

Family Trust are complex and must take into consideration your overall estate planning objectives.

To see if a Family Trust would benefit you, your family and possibly your business please call: 01384 635457 or email: to arrange an informal meeting at our cost to explore your estate planning requirements.

Need help with your business succesion planning?

If you need help with your business succession planning and holdover relief please call: 01384 635457 or email:

You can drop us a message or ask a question – Here –

Mitigating Capital Gains Tax using Holdover Relief

If you run a family business, you wish to pass the assets now to the next generation. How can you do this and mitigate any capital gains tax?

Holdover relief is a useful tool used in Succession Planning for companies that wish to pass on business assets to the next generation without an immediate capital gains tax charge. At typical example of succession planning we deal with on a regular basis is: Mr. Banks age 68 the founding shareholder of Widgets Limited wishes to transfer his shares to his son Alan.

Regardless if the shares are given for no value or below market value, HMRC will deem Mr. Banks has disposed of the asset for its market value and capital gains tax is potentially due on the disposal.

Solution - Passing Private Limited Company Shares to the Next Generation.

However, immediate charges to capital gains tax maybe reduced or eliminated by means of reliefs. Holdover relief applies to assets in the business, goodwill and shares in private limited companies. Holdover relief postpones the gain for the ‘donor’ (Mr. Banks) and passes the gain to the ‘donee’ (his son Alan). How does it work? Within two years of the gift being made the donor and the donee must jointly elect to ‘holdover’ any gain arising.

When (or if) Alan disposes of the business assets, capital gains maybe chargeable on gains arising in both the period of previous ownership by his father Mr. Banks and the period of current ownership by Alan.

If the business succession plan is based on Alan passing his shares onto the next generation and there are no plans to sell shareholdings – holdover relief is particularly useful as when Mr. Banks dies any capital gains liability will be effectively extinguished. We multi-generational succession planning the business can eliminate any capital gains tax by passing the business assets to the next generation.

Holdover relief may apply to the gift of business assets into trust. Potentially deferring capital gains tax until the beneficiary eventually disposes of the asset.

Holdover Relief - Key Points

Disposals that qualify for Hold-over Relief

  • Gifts of business assets
  • Gifts of unlisted shares in trading companies etc.
  • Gifts of agricultural land
  • Gifts which are chargeable transfers for inheritance tax (IHT) purposes
  • Certain types of gifts which are specifically exempted from IHT

How to Claim Holdover Relief?

Relief is claimed by submitting HMRC Form HS295.

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