23. Trust Deed

A Trust Deed is a legal document that outlines the terms and conditions of a trust agreement. It establishes the framework for managing assets held in trust for the benefit of one or more beneficiaries. Trusts are commonly used for estate planning, asset protection, charitable purposes, and ensuring the financial well-being of beneficiaries. 

How it works and how to obtain one:

• Establishment: A Trust Deed is created by a settlor (the individual establishing the trust) and executed according to legal requirements. The Trust Deed specifies the assets to be held in trust, the identity of the trustees responsible for managing the trust, and the beneficiaries entitled to benefit from the trust assets. 
• Trustee management: Trustees are appointed to manage the trust assets and adhere to the terms outlined in the Trust Deed. They have a fiduciary duty to act in the best interests of the beneficiaries and administer the trust according to the terms of the Trust Deed and relevant laws. 
• Beneficiary rights: Beneficiaries are entitled to receive benefits from the trust assets as specified in the Trust Deed. These benefits may include income distributions, access to trust assets, or other forms of financial support. 
• Legal formalities: Creating a Trust Deed typically involves drafting the document with the assistance of legal professionals, such as solicitors or trust lawyers. The Trust Deed must comply with legal requirements and be properly executed to be legally valid. 

Percentage allocation and calculation 

The allocation of percentages in a Trust Deed depends on various factors, including the settlor's intentions, the nature of the trust assets, and the needs of the beneficiaries.

Common considerations include: 

• Beneficiary needs: The settlor may allocate percentages based on the financial needs and circumstances of the beneficiaries. For example, a trust may allocate a larger percentage to a beneficiary with greater financial dependence or special needs. 
• Asset distribution: Percentages may be determined based on the value and type of assets held in trust. For instance, if the trust primarily consists of property or investments, the allocation may reflect the proportional value of each asset. 
• Equitable distribution: Settlors may aim to achieve fairness and equity among beneficiaries when allocating percentages. Factors such as age, health, financial status, and relationship dynamics may influence the distribution of percentages. 
• Legal considerations: Legal requirements and tax implications may also influence the allocation of percentages in a Trust Deed. Legal advice from professionals knowledgeable in trust law and taxation is essential to ensure compliance with relevant regulations. 

Benefits of a Trust Deed 

• Asset protection: Trusts can provide protection against creditors, lawsuits, and other risks by placing assets beyond the reach of personal liabilities. 
• Estate planning: Trusts offer effective estate planning solutions by facilitating the transfer of assets to beneficiaries in a structured and tax-efficient manner, avoiding the probate process, and minimising estate taxes. 
• Privacy: Trusts offer a level of privacy as they are private arrangements that do not require public disclosure, unlike wills or probate proceedings. 
• Control and flexibility: Settlors can maintain control over the distribution of assets and specify conditions or restrictions on beneficiary access, ensuring that assets are managed according to their wishes. 
• Tax efficiency: Trusts may offer tax benefits, such as reducing estate taxes, capital gains taxes, or income taxes, depending on the jurisdiction and the specific terms of the Trust Deed.