There are two principle reasons for forming a family trust (known as an inter vivos trust because it is formed during your lifetime). Firstly, the trust is a valuable estate planning tool as when you die, the trust does not die, so there is no Estate Duty payable on the trust assets and no CGT event. Secondly, the assets of a well formed and administered trust cannot be attacked by your creditors in the event of your bankruptcy. This diagram demonstrates both uses of the discretionary trust. Note that since this article was published, CGT for individuals has increased…
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