• The trustee is the legal owner of the asset, who looks after it until it can be passed onto the beneficiary

• If a discretionary trust, a beneficiary cannot benefit from the asset until the trustee says so

• The trustees’ powers (e.g. to amend the beneficiaries etc) depend on the wording of the trust

• The settlor puts assets into an appropriate trust, the terms of which will be such that the settlor cannot be a beneficiary

• Because ownership passes from the settlor to the trustee, it is considered to be no longer part of the settlor’s estate

• Because the settlor cannot be a beneficiary, there is no reservation of benefit*

• Inheritance tax savings can be made (a 7-year rule applies)

• Bare trusts – a very inheritance tax efficient trust which is ideal if the beneficiaries are known and won’t ever change

• Discretionary gift trusts – offers the chosen trustees greater discretion over the final beneficiaries than a bare trust

• Flexible gift trusts – allows the beneficiaries to be named now and allows for alteration at a later date

• Business trusts – used exclusively in business planning for partner/director share protection