Client Explainer

How a Trust Works

A simple visual walkthrough of how a discretionary trust works.

Becketts Financial Services · Client Explainer
How a Trust Works A simple visual walkthrough BEFORE WE BEGIN About this guide There are many types of UK trust — bare trusts, interest-in-possession trusts, and others. This guide focuses on the most common and most flexible type: the discretionary trust. The key to trust planning is understanding your full financial picture. Your Becketts planner will guide you through whether a trust — and which type — may benefit the wider financial plan we are building with you. ▶ CLICK ANYWHERE TO BEGIN THE SAFETY DEPOSIT BOX (THE TRUST) Settlor(s) Individual or a couple £ Gift Trust Deed "The Rules" Trustees "Policemen of the trust" Generation 1 Generation 2 Generation 3 Beneficiaries Multi-generational Benefit FLEXIBILITY — A DISCRETIONARY TRUST CAN ADAPT Today + Years later + Future generations Beneficiaries can be added, removed or changed by the trustees as the family evolves. Investments Property Offshore Bond TRUST TAX REGIME applies inside Own tax rules Year 0 1 2 3 4 5 6 Year 7 £ Gift made (starting value) ✓ Out of estate Within nil-rate band: no immediate IHT, gift outside estate after 7 years. Above nil-rate band: 20% lifetime IHT charge on the excess.

Welcome

A simple visual walkthrough of how a discretionary trust works. Click anywhere on the diagram or press Start to begin.

Tip: click the diagram, press Next, or use the right arrow key to reveal the next step.