Are you interested in writing a will in the UK? If you are, then you are already delving into the world of UK executry law. There is a ton of information for you to process but for now, let’s start with the basics of wills and Trusts Definition. A will is basically just a document that enumerates what is to be done and how to dispose of your property after your death (called an estate). Within the will, you may list specific properties which need to be given to particular individuals or entities and charities. These persons, whether natural or artificially created by law (such as the case of corporations, charities and other legal entities), are called your “beneficiaries.” The term itself is pretty self-explanatory, they are basically the people who benefit from your estate. As the person who creates the will, your are known as the “testator.” Now in case you die without making a will, you are said to have died “intestate.”
Already, this might seem like a lot of information to process, but just keep these terms in mind as we go a little bit deeper now into wills and Trusts Definition.
Trusts Definition Proper
A will should not be confused with a trust, although both play a prominent role in the world of UK executry law. Now in a trust agreement, the person who creates the trust and is the original owner of the property to be placed in the trust, is called a “settlor.” The settlor will basically relinquish ownership of the property to a person called a “trustee.” However, the trustee will not be the one to eventually benefit from the property, because he/she simply holds and manages the property in favour of the beneficiary. As you can see here in this very basic Trusts Definition, there is actually a beneficiary in both wills and trusts. So why would you place your property in trust instead of just giving it straight to the beneficiary in the form of a gift or a donation? The answer would be “legal capacity.” As you should know by now, not all natural persons have what is known as legal capacity, or the capacity to do acts with legal effect. Minors are a prime example. Their acts need to be ratified by their parents or legal guardians in order to have any legal effect. Therefore, if you are entrusting real property (land) for example to a minor individual who does not yet have any legal capacity to act, then one way of doing this would be through a trust.
A Trust Is Subject To Taxation
If the estate in a will is subject to a 40% UK inheritance tax, taxes are also imposed upon a trust. If the trust receives income, then it must file an income tax return. The income of the trust may either be treated as the trustees’ income, the beneficiaries’ income, or even a mix of both. Trustees are taxed at 33% of the Trustees income and beneficiaries are taxed at their personal income tax rates.