Setting up a Trust in Great Britain

If you’ve ever been involved in registering a trust company in Great Britain, you know that this can be a complicated process. Lack of familiarity with the legal framework and legal terminology may further complicate this already complicated question. So, what does it take to register a private trust company in England? 

The main goal of establishing a private trust company lies in managing assets more effectively. A trust company can act as a trustee both in one trust and in a group of related trusts. Simultaneously, it can control management, sale or transfer of assets within these trusts.

Benefits of Opening a Trust in Great Britain

This type of company is becoming increasingly popular with individuals and legal entities seeking to protect their assets in the long term. Establishing a trust for family purposes means that future generations will be able to profit financially from the assets held in the trust.

As stated earlier, a trust is a safe place to protect assets that the trust controls independently. However, for that to happen, the trust itself should be properly managed. 

Another advantage of opening a trust in England is taxation legislation, especially when it comes to inheritance taxes. All property, cash and investments held in trust remain intact even after the death of the founder of the trust. The assets of the trust are not transferred to third parties, nor are they subject to a high tax rate. 

Procedure for Registering a Trust as per Common Law 

In order to register a trust, the following criteria must be met:

• An experienced corporate lawyer and tax specialist capable of choosing the most optimal trust structure based on your needs and goals should be selected;
• Assets to be placed in the trust should be identified;
• A method for managing assets placed in a trust should be determined;
• One or more beneficiaries between which profit from the trust will be distributed should be selected;
• A trustee who will be overseeing and managing distribution of assets should be selected. 
• A trust agreement as per Common Law based on the needs of the trust founder should be drawn up. 

Corporate vs Individual?

Establishing a trust in the UK requires one to be aware of the various options available. It is important to choose a trust that will best suit your needs and expectations. The role of the corporate manager is to act in the interests of both the founder of the trust and its beneficiaries. They should also be an independent controller and custodian of assets placed in the trust.

There are two main types of trustees:

• Corporate
• Individual

Individual trusts are, basically, individuals managing a trust without a company structure. Up to 4 persons can simultaneously act as individual managers.

Advantages of selecting an individual trustee in England include:

• Low cost of creating and managing a trust, as well as the minimum complexity of its establishment. 

Disadvantages are as follows:

• An individual trustee may be personally liable for any legal issues related to the trust;
• Risks involved in distinguishing between personal and trust assets;

Advantages of selecting a corporate trustee in England include:

• The company is a separate legal entity with limited liability;
• No difficulty in distinguishing between personal assets and trust assets;
• No difficulties with succession and control over the trust in the event of the death of one of its directors;
• A new member of the trust is appointed, they should also become a trustee.

Disadvantages of corporate trusts include:

• high costs & registration-related difficulties
• maintaining accountability with the corporate manager. 

However, the benefits of a corporate trustee often outweigh the disadvantages.

Conclusion