The term “trust fund” is often associated with rich people and the idea of protecting younger people until they are ready to access money. However, there are various types of trust funds, and a lot of people can both create them and benefit from them. Equally, there are legal issues to be aware of when setting them up.

What is a trust?

A trust is some money that is set aside for different purposes. Often, it is kept aside for when someone is ready to use it. For example, a child may not be mature enough to handle a large amount of money, so a fund is set up to look after them until they can access it. This can be set up at any time, or it can be written into your will.

There are three parties involved in a trust- you (the settlor) as the person establishing the fund, a trustee controls the money or assets to be passed on, while a beneficiary is the one who receives what is due to be passed on.

This is where issues can occur – you need to be sure that the trustee is able to handle what they need to be responsible for. Ideally, you want someone you can trust, but it may be best if the person is not a close friend or family member. In some cases (such as looking after a disabled child), a charity may be able to help toward the cost.

Before taking on the role of a trustee, it is recommended you seek legal advice, so you know what your role is likely to be and the responsibilities involved in more depth and detail.

Different types

A bare trust means anyone over the age of 18 acquires all the property, funds, etc. of a trust once they reach that age, an interest in possession trust allows access to funds but not assets while a discretionary trust means the trustees decide how much the beneficiary receives.

Often, people will have a mixed trust that will combine these different types. So it may be that a beneficiary can have full access to a certain amount of a fund but then can’t have the rest until later on.


The rate of tax can vary depending on what is included in the trust. For example, inheritance tax can be due on it if assets are transferred out or if someone dies, and the trust was set up as part of their will. Capital gains tax can also occur if an asset has increased in value or has been taken out of the trust.

We can help

At Larcomes, our motto has always been “Big enough to specialise, small enough to care.” The big picture elements need to be taken care of, such as ensuring that funds are properly handled. Equally, we want to keep in touch with you and give you the customer service that you, as a valued client, deserve. For more information on setting up trust funds, please contact us today.