Creation of trusts—the client's objectives
Creation of trusts—the client's objectives

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • Creation of trusts—the client's objectives
  • Preliminary considerations
  • Constraints
  • Occasions for the making of a settlement
  • Choice of settlement
  • Deciding to go ahead
  • Undue influence

Preliminary considerations

Before commencing work the solicitor drafting the settlement deed must be clear in their mind what they are seeking to achieve. The client's (settlor's) objectives may, for example, include the following:

  1. a wish to confer benefits on members of their family or other individuals

  2. to provide for someone who lacks the legal capacity for absolute ownership

  3. to retain control of the devolution and management of family assets

  4. to treat income and capital of a gift in different ways

  5. to transfer the management of and responsibility for assets to trustees who may in, the settlor's view, have the necessary expertise and be better qualified to conserve and develop them

  6. to prevent the dissipation of assets as a result of, for example, marriage breakdown

  7. to shield themselves and their assets from future changes in legislation and to keep the trust property secure from creditors

  8. to achieve confidentiality

Constraints

There are a number of constraints on the settlor's intention to create a settlement. For example:

Transactions defrauding creditors

The settlor will not be able to deprive creditors of satisfaction by transferring property by way of voluntary settlement to other persons (usually family members) because by virtue of section 423 of the Insolvency Act 1986 (IA 1986), the court may set aside a transaction at an undervalue if satisfied that the