Lee Sharpe looks at tax aspects of using trusts to hold investment properties for loved ones.
This article is based on English law and readers should note that there are differences between the UK jurisdictions. Treatment in the EU, and further afield, can also be quite different.
Why use a trust?
Trusts are usually taxed very heavily. Nevertheless they are in some cases well placed to expedite a person’s wishes, such as:
- To legally hold assets for the benefit of young children until they are old enough to take direct ownership of them.
- To give someone the temporary benefit of assets until they pass to their intended beneficiaries (typically, a will providing assets for the occupation of/to provide income for, the surviving spouse as ‘life tenant’ until they pass to the children of the marriage).