Setting up a trust for a child is simple. It provides a safe haven for funds set aside for the child’s benefit and at the same time can be tax efficient.
Trusts for children are often used for maintenance and education. Often grandparents want to contribute financially to the upbringing of their grandchildren and they can consider using a trust. This ensures that the funds are safe and managed properly without be made freely available to the child until they are mature enough to manage the funds sensibly.
By doing so the income distributed from the trust is treated as the child’s and their income tax allowances can be used. This increases the available income for the child’s benefit and can be more efficient than simply providing the child’s parent with regular funds.
The trust can be flexible so that lump sums can be paid from the trust when required for specific situations (i.e. musical instruments, international trips, etc).
These days children often leave higher education in debt and find it difficult to raise a sufficient deposit to acquire residential property. At that point the trust can be distributed and the remaining capital used to relieve this burden.
Please contact us for more advice.
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