Trust Law is an area of legal practice heavily influenced by principles of fairness. Therefore, those specializing in this area can find themselves facing various issues related to trusts such as making sure charities spend donated funds properly or mediating disputes between family members.
Trusts are a form of investment
Trusts can provide your assets with added protection after death and even during separation or divorce proceedings, but before making this part of your estate plan it’s a good idea to consult with both a financial professional and attorney first to make sure it makes sense for you.
Equity trusts resemble mutual funds and exchange-traded funds (ETFs), yet have distinct features. ETFs invest in various asset classes; equity trusts instead specialize in stock investments and offer flexible distribution options like cash or capital gains distributions.
Discretionary trusts allow the trustee to exercise discretion when dispersing trust rights, giving them flexibility in response to changing circumstances or altering trust terms, such as disbursing income among multiple beneficiaries or deciding who receives property at the end of its term. Such arrangements are ideal for people with multiple beneficiaries.
They are regulated by the Financial Conduct Authority
Trusts are an integral component of modern law of equity. If you work in legal profession as a paralegal, solicitor or barrister, understanding trust law rules – including general trust law principles, resultant trusts and advancement. Plus liens and security laws will become essential.
However, the FCA cautions that some firms “seriously mismanage” trust assets. Consumers should seek independent advice to make sure their trust agreement clearly states what the trustee can do with funds such as investments preferences and risk tolerance levels.
In Boston Trust Company Ltd v Szerelmey, the court determined that although a trustee could bring claims against one of the founders of their business, these were limited to claims against their associated companies due to holding company shares held by Boston Trust which could only be brought before court under an act of parliament.
They are tax-free
Equity trusts offer beneficiaries a tax-free benefit when receiving distributions from them, making this arrangement particularly appealing to high-income individuals due to trust income being taxed at a lower rate than individual income, with various exemptions helping beneficiaries avoid paying any taxes at all.
Trusts are exempt from transfer taxes such as estate and gift taxes, while most investments may be subject to them. Transfer taxes were once a significant consideration in estate plans but changes to law have rendered them almost irrelevant for most people.
Scammers sometimes use trusts as a bait to deceive unsuspecting investors into purchasing worthless “kits” at high cost and use high pressure sales tactics to gain access to financial information of consumers and offer products like annuities at great cost. You should do your research carefully when signing up for living trusts – only register with companies with proven legitimacy!
They are a self-directed IRA
Equity Trust provides self-directed retirement accounts (SDIRAs) that enable investors to diversify their portfolio with alternative assets like real estate, promissory notes, cryptocurrency and private equity – in addition to traditional investments – by means of self-directed IRAs. While Equity Trust doesn’t offer legal or investment advice directly, but acts instead as custodian for its client accounts while permitting their owners to make independent choices regarding how best to invest.
An IRA owner may invest in real estate and rent it out, providing that their landlord does not receive any benefits related to them or “sweetheart deals.” They cannot, however, live there themselves or use it for personal gain.
When administering a discretionary trust or power, its trustee must be able to reliably identify all members of its class of beneficiaries – this requirement stems from Re Gulbenkian and McPhail v Doulton case law.