What to do if you are stuck with a Trust

Sometimes, particularly if you have inherited assets from someone else, you may find that they are held through a trust – in other words a legal entity under which one or more persons known as the trustees) hold the assets (the trust fund) on behalf of others (the beneficiaries).

These trusts can rumble on for a number of years and the original intention of the person who set up the trust may have passed e.g. the trust may have been intended for educational purposes or to provide a form of protection over the assets for the benefit of the beneficiary but this need may now have passed. What can be done about this?

The best starting point, if you are the beneficiary in this position, is to speak to the trustees and hopefully to get them on your side, because this will make it much easier when it comes to breaking up the trust. The trustees can then approach a lawyer specialising in trusts to advise as to how the trust can be brought to an end, taking into account not only the laws relating to trusts but also tax consequences, which normally means inheritance tax and capital gains tax. It is not always obvious, particularly if the trust deed is a complicated document, as to how it can be brought to an end but a specialist solicitor should be able to find a solution.

A trust is normally brought to an end by exercising powers of appointment or of advancement, or by assigning trust assets from one beneficiary to another, who becomes entitled to the trust fund as a result, or by a partition arrangement, whereby the assets are split between the beneficiaries.

Even if the trustees do not agree with the trust being brought to an end, there may be an opportunity for the beneficiaries, if they are adult and entitled between them to the whole of the trust fund, to force the issue on the trustees. A specialist solicitor can also advise you on this and also what need to be done if one or more Trustees have passed away.

To find out more about this or about trusts more generally, please contact Adam Bruce of this office (email: adam.bruce@utk.co.uk telephone 01267-237441) who is a specialist solicitor in this field and has been for nearly thirty years and is currently Chair of the Wales Branch of the Society of Trust and Estate Practitioners, which is recognised world-wide for its expertise in this area.