Trusts
A trust is a way of holding assets such as investments, money, buildings and land for people (who are known as the beneficiaries). There are different types of trusts each with different rules and treatments.
All trusts must be managed by trustees. The trustees are the legal owners of the assets which are held in a trust. Their role includes dealing with the trust’s assets, managing the trust on a day-to-day basis and paying any tax. They will also be involved in deciding how to invest or utilise the trust’s assets.
A trust could have been established for one of several reasons which can include:
- if someone is too young to handle their affairs themselves
- when someone cannot handle their affairs due to incapacity
- passing on assets while someone is still alive
- passing on assets after someone has died
- controlling and protecting family assets
- under the rules which deal with the affairs of someone who has died without a will
Whilst trusts can be very effective in achieving these aims, they do involve a good deal of responsibility as far as the trustees are concerned. In recent times trusts have become subject to more scrutiny, taxation and legislation. In addition, The Financial Conduct Authority does not regulate trusts.
It appears that new trusts may need to register with the Trust Registration Service (TRS) within 30 days of creation. Up to now, certain types of trust have not needed to register. Trusts which have a “tax consequence”, however, have been required to register for some time.
It is anticipated that the number of trusts that will need to register will multiply as a result of the new rules which are part of the Fifth Money Laundering Directive.
The legislation is part of an EU Directive. The outcome of Brexit negotiations will not have an effect as the UK is committed to its introduction in any event.
A series of penalties currently exist for late registration and these are likely to be reviewed.
Responses to the initial consultation closed on 10th June, with a more technical consultation expected later in 2019, but we wanted to make our many trust clients aware of the possible forthcoming changes. If you have any questions whatsoever at this stage, please don’t hesitate to contact your usual Chancellor adviser.
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