If you decide to create a trust, you will be known as the ‘settlor’ or creator and how it will be run will be stipulated by you. After you pass away, ownership and control is transferred to the nominated trustees, who will become legally obliged to manage the assets on behalf of your beneficiaries. A trust deed dictates how trustees should manage those assets. You should have confidence in the trustees, who will legally own the assets and settlors can be named as trustees also. Importantly, assets in trust are not considered part of your estate, therefore they won’t be included in your inheritance tax calculations, providing you live for 7 years before placing them into the trust. However, you will pay 20% tax when setting up a trust if it’s in excess of the nil-rate band, unless you are continuing to benefit from the asset. The way trusts are taxed depends upon the type of trust you select. The most commonly used is a discretionary trust.
Deed of variation