Learn how you can establish a Freezer Trust with Oak
Setting up an offshore trust is often seen to be a complex and costly exercise; however, this does not need to be the case if one looks to use a Freezer Trust.
Traditionally, offshore trust’s complexity and costs arises when structuring their funding, normally done through a donation or an interest-bearing loan account. A number of potentially burdensome tax events, such as Income Tax, Capital Gains Tax and Donations Tax, will be triggered by each of these funding mechanisms. In addition to taxes, there may be substantial setup and management expenses for the trust.
A Freezer Trust, on the other hand, can be established with nominal settlement up front (normally £100), with a view to receive future assets when the funder passes away, from the funders estate (through his or her will), life insurance policies or pension. Generally, during the testator's lifetime, there will be no income tax, capital gains tax, or donations tax due to the low initial financing needs and the Freezer Trust's mostly inactive or dormant status until assets are transferred to it.
There is nothing complicated about how a Freezer Trust operates. The trust acquires ownership of the assets from the deceased's estate, life insurance or pension, in place of the deceased’s heirs, who are typically the people the testator would have named in his or her Will. These assets will still be accessible to the beneficiaries, but at the trustees' discretion and in compliance with the testator's desires and the terms of the trust agreement.
Freezer Trusts can be an extremely useful means of succession planning, to protect inter-generational wealth. As a valuable tool in the estate planning process, Freezer Trusts should be integrated into ones Will so, should be looked at when one is updating their Will.
Establishing a Freezer Trust is an extremely prudent – and relatively inexpensive – form of protecting assets that can later be distributed to the beneficiaries.
Despite the appeal of their simplicity, establishing a Freezer Trust can be technical at the outset and it is important that your Will, the Freezer Trust’s deed and the estate planning, work together to ensure they meet your expectations.
Here at Oak we have dedicated professionals with considerable experience that enables us to provide our clients with the support that they need to establish and manage their family wealth. Contact Scott, to find out more.
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