Asset Protection

Asset Protection

Your Family, Your Assets, Your Way

In today’s economic climate it’s never been more important to protect your property, investments and any other assets you may have. Taking advice about how you can safeguard your assets during your lifetime whilst passing on as much as possible to your family after you die makes a lot of sense.

What is a Trust?

Quite simply, a trust is a legal ‘wrapper’ which can hold some or all of your assets. There are different types of trusts and the use of specifics trusts will depend on your objectives for your assets.

One or more Trustees are appointed and they become legally responsible for holding the assets. Assets such as property (or your share of it), land, money or investments are placed in trust for the benefit of one or more beneficiaries.

The Trustees are responsible for managing the trust and carrying out the wishes of the person who has put the assets into the trust (known as the Settlor).

It may be possible for you to retain control over the assets in the Trust during your lifetime. You may be able to sell your property or investments whenever you wish and receive the full sale proceeds.

Your wishes for the trust are usually written into your Will or set out in a legal document called a Trust Deed.

An essential part of succession planning

Trusts can form an essential part of your estate planning by protecting your capital and other assets and maybe providing tax efficiency whilst still allowing your beneficiaries to receive financial support in a controlled way.

The purpose of Trusts

There are many reasons why you may want to set up a trust.
Here are a few examples of why setting up a Trust may be a good idea:

  • To control and protect family assets against claims such as matrimonial claims or insolvency claims
  • For tax efficiency, perhaps minimising inheritance tax
  • When someone is too young to handle their affairs
  • When someone can’t handle their affairs because they are incapacitated
  • To pass on money or property whilst you are still alive
  • To pass on money or assets when you die under the terms of your Will known as a Will Trust

There are several types of ‘family’ trusts and each type of trust may be taxed differently. There are also other types of ‘non-family’ trusts which can be used in other circumstances, for example to help in the administration and future conduct of a business.

Can I retain control?

Once you have decided which assets are to be protected they become the property of the Trust. The Trustees will then have control of the Trust assets. You can, if you so wish, appoint yourself as one of the Trustees however, if at all possible, you should not be a sole Trustee of your Trust. Ideally there should be at least one other Trustee and it is for this reason you must consider carefully who the other Trustee will be.

You may wish to consider appointing Stuart and Stuart Solicitors as a professional Trustee. Having many years of experience managing Trusts, we are well placed to provide an impartial professional service for you.

The role of the Trustees

Trustees are the legal owners of the assets held in a trust. Their role is to deal with the trust assets in accordance with the ‘trust deed’. This includes managing the trust on a regular basis and paying any tax due by the trust. The trustees must also decide how to invest the trust’s assets although this will always be in line with the contents of the trust deed.

The extent of the trustee’s responsibilities will depend on the type of trust it is and our specialist Trust Solicitors in Edinburgh and the Lothian’s will help you arrive at an informed decision about which Trust is suitable for your needs, who to appoint as Trustees and what responsibilities they will have.

Stuart and Stuart specialise in the area of Trust Planning and in particular Asset Protection. We have extensive experience in advising Settlors, Trustees and Beneficiaries.

If you would like advice on the creation of a Scottish Trust or to find out if Asset Protection is right for you, contact us for an initial consultation with one of our specialist Trust Solicitors in Edinburgh, Bonnyrigg or Penicuik Offices.

To speak to one of our Solicitors call 0131 222 9975

Or email us at

What is a Bare Trust?

With a bare trust each beneficiary has an immediate and absolute right to both capital and income. The beneficiary will have to pay income tax on the income that the Trust received and they may also be liable for Capital Gains Tax and Inheritance Tax.

What are the benefits of a Bare Trust?

If you set up a Bare Trust you can be certain that the assets in the Trust will go directly to your nominated beneficiaries.
Once the trust has been set up the beneficiaries can’t be changed. The assets are held in the name of a trustee however the trustee has no discretion over what income or capital to pass onto the beneficiary. Bare trusts are commonly used to transfer assets to minors and are normally held until the minor reaches the age of 16 (in Scotland).

What is an Interest in Possession Trust?

An Interest in Possession trust is one where the beneficiary has an immediate right to the income from the trust and the use of any assets that do not produce income. The trustee(s) must pass all of the income (less expenses) to the interest in possession beneficiaries. The beneficiaries do not normally have any rights over the capital held in this trust. The capital will normally pass to a different beneficiary in the future however depending on the terms of the trust it is possible for the trustees to have the power to pay capital if deemed appropriate.

What is a Discretionary or Accumulation Trust?

This is a trust where the trustees have discretion over how to use the income of the trust and also the capital. An accumulation trust is one where the trustees have the power to accumulate income within the trust. The trustees are the legal owners of any assets within the trust. These assets are known as trust property and the trustees are charged with running the trust for the benefit of the beneficiaries.

The trustees have the discretion about how to use the income of the trust. They may also have discretion about how to distribute the trust capital and may also be able to accumulate income.

What is a Settlor Interested Trust?

If you put assets into a trust you can retain the right to revert some or all of the assets back to yourself.

Andrew Bertram Solicitorin in Edinburgh, works at Stuart and Stuart solicitors
Stuart & Stuart solicitors Edinburgh-contact


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