TRUST ADVICE & CREATION IN SCOTLAND
With a trust, you can:
- Control how your assets are used in the future.
- Appoint reliable people to administer your trust.
- Protect vulnerable or underage beneficiaries.
- Maintain your entitlement to claim means-tested benefits following an injury.
Family Protection Trusts are often regarded as complicated, but they really don’t have to be. At its simplest, a trust holds assets on behalf of people who cannot or perhaps should not own them outright themselves.
With a professionally drafted trust you can go a long way to protecting your cash, assets and family members. There are a host of financial and welfare benefits to creating a trust, but financial advice must be sought if you are considering a trust – as there are many tax and financial implications you must be made aware of before creating a trust.
There are many forms of trust you can make now or that can be set-up in the event of your death. The type of trust that fits your wishes will depend on your personal circumstances, preferences and financial situation. Each type of trust comes with its own requirements and tax implications – be it Capital Gains Tax, Income Tax, Inheritance Tax or any other tax regime.
A Discretionary Trust gives your trustees absolute discretion regarding the administration of the trust – including how the income (i.e. interest) and capital is to be distributed. This means that the trustees you name in the trust deed will have the right to determine which person or persons receive anything from the trust – and at whichever frequency they so decide. You can provide your trustees with guidance in the form of a letter of wishes, but your trustees themselves will have the final say.
This is a simple version of a trust, most commonly used to hold personal injury compensation money. In a bare trust, one or more beneficiaries has an absolute entitlement to both the trust income and capital. There is no discretion afforded to the trustees, as the identity of the beneficiaries is explicitly stated.
This is most commonly created in a will. If you own a house with someone else and you’re concerned that your surviving co-owner may sell or transfer the house to someone other than your family or loved-ones in the event of your death, you can state that your surviving co-owner can occupy and use your share of the house but not obtain the legal ownership of that share.
The property is held by your trustees on behalf of the surviving co-owner, who is entitled to use and enjoy the property. On the co-owner’s death (or other event specified by you), the property will pass to the beneficiaries you have named in your liferent trust.
Vulnerable persons trust
It is often the case that substantial assets or sums are to be passed to someone who is incapable of safeguarding these assets or sums by themselves. In certain circumstances, a vulnerable person’s trust can protect such a beneficiary from financial embarrassment, however eligibility for a vulnerable person’s trust is predicated upon strict criteria, as there are substantial tax benefits available for this type of trust.
We serve all Scottish areas including Glasgow, Edinburgh, Dundee, Aberdeen, Fife, Stirling, Inverness, Perth, Troon, Oban. A trust advice service Scotland can rely on.
Family Protection Trust Q&A
What is Confirmation in Scotland?
Confirmation is a legal document from a Sheriff Court that gives the person dealing with the deceased’s affairs authority to receive the money and property belonging to the deceased person.
Is Confirmation the same as Probate?
The terms are broadly similar, but it is important to note that “Confirmation” is the procedure followed in Scotland only. Generally, “Probate” and “letters of administration” are terms used to describe the legal process involved in the estates of people who lived in England and Wales at the time of their death.
Do you need a Will to get Confirmation in Scotland?
No. Confirmation may be required for people who have died with or without a Will. If the deceased person made a Will during their lifetime, this will make the process of obtaining Confirmations slightly less expensive and time-consuming.
How long does Confirmation take in Scotland?
Guidance issued to all Scottish solicitors states that the person dealing with the estate (that is, the “executor”) should not finalise and distribute the estate within six months of the date of death. This time period allows creditors and other parties owed money from the estate time to make their claim on the deceased person’s estate.
If the executor wishes to conclude the estate administration within six months from the date of death, we may request that instruction in writing. In such circumstances, the executor will be advised of the risks associated with the early winding-up of an estate in Scotland.
Is Confirmation/Probate required in Scotland?
This depends on the type and value of assets owned by the deceased person at the time of their death. In Scotland, Confirmation will be required if the deceased owned a property in their own name (and in some cases, where they owned a property jointly with someone else). Confirmation will also be required if the deceased person had money over a certain amount in their bank account(s) on death. Each bank or building society has its own threshold – over which they will insist on the executor obtaining Confirmation through the Sheriff Court.
Other assets may require Confirmation to be obtained before they can be released – like shareholdings, Premium Bonds, death in service sums not written into trust, etc.
Do I need to apply for Confirmation Scotland?
If you have been asked by a bank or other organisation to provide Confirmation (also known as probate or letters of administration in England and Wales), this means that you will need to complete and submit a set of official forms that detail the deceased’s assets, personal circumstances and those of the executor(s).
The Confirmation document contains an inventory, which must be populated to include all assets forming part of the deceased’s estate. In some cases, assets such as insurance policies written into trust or an employer’s death in service benefits may not form part of the estate, so it is important that you are able to distinguish estate from non-estate assets
How much does Confirmation cost in Scotland?
Firstly, it is worth noting that legal fees are typically settled from the estate funds at the end of the estate administration period. The only payments sought up-front would be outlays such as Court costs and expenses to obtain copy title deeds, etc.
For smaller estates, the Sheriff Clerk can assist you with obtaining Confirmation if the total value of the deceased’s estate is less than £36,000. However, if the gross value of the estate is more than £36,000 it is recommended that you instruct a solicitor to complete and submit the Confirmation paperwork on your behalf.
There is no standard fee charged by solicitors. The professional fee will depend on the complexity and value of assets, as well as the amount of time it will take to complete the estate administration and settle all claims and liabilities.
We work to a fixed-fee rather than an hourly rate, as this gives the executor certainty regarding the costs at the very beginning of the matter. If you have an idea of the deceased person’s assets and their approximate values at this time, contact us for a fee quote and a no-obligation conversation.
How many copies of Confirmation are needed?
Unless you ask the Court to provide additional copies (at cost), the Executor will receive only one, sealed version of the Confirmation document. This could prove time-consuming for the Executor to exhibit this document to all of the third parties holding the deceased person’s asset. We therefore recommend that you obtain three to six additional Certificates of Confirmation when applying to the Sheriff Court for Confirmation in the first instance. Additional Certificates cost £8.00.
What are the Court’s costs for obtaining Confirmation/probate?
There are statutory Court fees for issuing confirmation in Scotland. If the gross estate value is less than £50,000 then there is no fee payable to the Court. From £50,001 to £250,000 the Court’s fee is currently £266; from £250,001 upward, the Court’s fee increases to £532. These Court fees are reviewed and increased on an annual basis by the Scottish Courts and Tribunals Service.
How to proceed without Confirmation/probate?
You may not require Confirmation in Scotland if the gross value of the deceased’s estate is less than £36,000.
What is a bond of caution?
A Bond of Caution is a particular type of insurance policy used to protect the estate’s beneficiaries from any mistakes made by the executor in the administration of the estate. The Bond of Caution also offers protection in circumstances where someone who is not entitled to apply for Confirmation does so, or where an executor fails to distribute the estate in accordance with the law. Without a Bond of Caution, the Sheriff Clerk will reject all applications for Confirmation where the deceased died without having made a Will and without having been survived by a spouse/civil partner
How do I get a bond of caution?
What is a small estate?
A small estate is an estate where the gross value of the deceased’s money and property is £36,000 or less. In calculating the gross value, you should not deduct any debts, such as funeral expenses, gas or electricity bills, balance of mortgage, owed by the deceased.
What is a large estate?
A large estate is an estate where the total value of the deceased’s money and property is over £36,000. Dealing with a large estate (or one where the deceased owned a house or other property) can often be complicated and it is advisable to get legal assistance with the large estate procedure in Scotland.
How to get best advice on setting up trusts?
Setting up a trust can be complicated – it’s best to use a solicitor to avoid costly mistakes. You can put money, property, investments or other assets into the trust. Depending on the type of trust you use, it might have to pay tax and the trustees might need to complete tax returns.
Do I need trust advice?
There are many different types of Trusts which can be used in many different ways. As such, you ought to seek advice before taking steps to create a Trust. You will also require financial and taxation advice on the consequences of creating and running a Trust. Trusts are often regarded as complicated, but they really don’t have to be. At its simplest, a trust holds assets on behalf of people who cannot – or perhaps should not – own them outright. Contact us today to get the best advice on your Trust.
What is a Family Protection Trust?
A Family Protection Trust is a legal document, created during a person’s lifetime, that transfers some of their personal assets into trust (as a separate legal entity). This type of Trust has been offered by a number of solicitors in Scotland – to greater or lesser effect. At Weir Law, we can provide you with advice and assistance in relation to any existing Family Protection Trust created by McClure Solicitors (or other law firms). We also provide initial guidance to people who may be considering such a Family Protection Trust.
How do I name new trustees?
If the current Trustees wish to step-away from the Trust – either due to age, incapacity or unwillingness – these existing Trustees must formally assume (i.e. appoint) a new Trustee or Trustees to take their place before they resign from their Trustee duties. We can prepare all necessary documents and registrations to ensure that the Trust is controlled by appropriate and willing Trustees.