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Effectively Building and Managing a Family Trust [Part Three] Drawing Up The Trust Documentation

Wednesday 18 May 2016

Previously in this series, we have reviewed what a family trust is and what it can do for you, and the considerations you should make when planning to establish one. Now, having carried out your research into what being the settlor of a trust will entail, the stage is set for actually drawing up the trust documentation.

Find Your Trustee

Finding a reliable trustee to oversee the management and execution of your trust is essential, and is worth doing some research for. It is not strictly necessary to employ a professional (like a solicitor or accountant) to be a trustee however handing control of your settled trust to a friend or family member can cause complications in the future. Appointing an impartial third party, preferably a representative of an established, well-renowned and well-regulated company, may be an expenditure, but the expertise and  objectivity they provide will ensure your trust being managed smoothly.

One of the key draws of a trust is the flexibility with which it can be approached and planned. Attempting to plan and manage a trust without a professional’s input and knowledge may leave you with a structure that does not provide you with the solution you need..  For advice on how to choose the right trustee for you, download our free one-page guide, 6 Essential Steps To Choosing A Trust Company.

Once your trustee is chosen, it’s time to have your trust deed drawn up.  Generally your chosen trustee can provide you with the necessary documentation, which summarises your personal background, circumstances and finances, and lay out the plans for your assets and who is to receive them.  Alternatively a lawyer will be able to draft the documentation also.  The process is remarkably simple.  The expert assistance a professional can offer will ensure that nothing important is left out, the documents do actually set out your wishes accurately and that no conflicts should occur in the future. Once the arrangements have been laid out on paper, the actual deed is drawn up for you to sign. An independent witness to your signature is required – preferably a person separate from the affairs of your assets – in order to validate the document. Once both settlor and witness have signed the deed, it is considered delivered and effective, unless otherwise indicated.   The final step for the trust to become active is for the initial settled funds (usually a minimal amount like £10) to be settled into the trust.

So, now that the trust deed has been drawn up, signed and the initial settled funds paid to the trustee completed and you are officially the settlor over a family trust, it is important to ensure that your affairs are overseen appropriately. While in some cases, the drawing up of the deed is essentially the last thing on the To-Do list, circumstances can change, and the best-managed trusts are those under the constant supervision of professionals.

The next big step is in the management of your family trust and the drawing up of a letter of wishes.  In our upcoming article, we will look at the immediate aftermath of your trust’s execution, and the ways in which you can ensure it is doing everything you need it to.  

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If you would like to read the rest of the series on Effectively Building and Managing a Family Trust, please click on the links below. 

Effectively Building and Managing a Family Trust [Part 1] Will, Trust or Will Trust?

Effectively Building and Managing a Family Trust [Part 2] 3 Things To Consider When Setting up a Family Trust

Effectively Building and Managing a Family Trust [Part 4] Managing A Family Trust 

Effectively Building and Managing a Family Trust [Part 5] The Running of a Family Trust