Umbrella Asset Trusts Explained

Tim ThorneBy Tim Thorne for Q Wealth

In our last article we highlighted remuneration trust planning as a flexible and compliant way of protecting profits from your business and an asset protection vehicle.

In this article we will build on the theme of trust planning and look at protecting your assets using the same trust technology.

Asset trust planning achieves many of the same asset protection, estate planning and tax planning benefits as the remuneration trust but instead of profits; we will protect property.

This can be your home; we can protect it from divorce, creditors, litigation or perhaps future loss when passed to your beneficiaries.

If you own and operate a property portfolio you might find value in planning for tax on your rent roll or gains from disposal of your portfolio. You may also find it valuable to protect your portfolio from litigious tenants or other unforeseen claimants in your business and personal life.

With asset trust planning this is all possible.


What is asset trust planning?

Under UK law and using legal strategies successfully implemented for more than two decades, a business, sole trader, individual or partnership can create an environment to protect their hard earned assets from creditors, litigation, divorce and un-necessary taxation.

An interesting by product of the planning is that there is no liability to Capital Gains tax, Inheritance Tax or Income Tax on any trust contributions or trust growth.


The Situation & Problem

A UK resident individual owns (solely or jointly) a Portfolio of investments that can benefit from the planning. These may be anything of a capital nature i.e. property, shares, bonds, chattels, equity etc. The properties may also be mortgaged. The incidence of capital gains tax and income tax is a significant problem with such investments and growth of the Portfolio. The Portfolio also carries the burden of inheritance tax on the death of its owner(s)


The Solution

Firstly an individual, company, partnership or sole trader decides to set up an structure using a specialist tax consultant and other fully regulated legal and trustee professionals. He or she (or it) then decides what assets to commit to the structure

This is an individual decision based on the client’s circumstances and what he wishes to protect and also to mitigate for tax purposes. This may follow guidance from the individuals or company’s professional adviser.

Alongside this the client sets up a management company. The trust can give permission for the management company to manage the assets by way of a Fiduciary Services Agreement.

The management company:

  • Does not own anything
  • Controls everything
  • Is not subject to tax
  • Provides total privacy
  • Cannot be sued

The management company has full powers to invest trust finds as it sees fit on behalf of the trustees. Profits from operation or disposal are free of tax and loans to individuals are available.

Some points to note:

  • The planning constitutes an effective exit strategy for company owners
  • Proceeds and profits of investments (interest/coupon/rent roll) can be re-invested
  • Uses statutory reliefs
  • 20 year plus proven track record
  • Involves no ‘tax avoidance’
  • Fully disclosed to HMRC and does not require a DOTAS reference
  • Advice given by experienced tax specialists for all HMRC enquiries relating to the planning.
  • Funds remain in the UK banking system at all times.
  • Control of assets can be passed to the next generation.

It’s also note mentioning that overseas clients that have UK tax / business commitments can also take advantage of this structure.

NB: your accountant may be unfamiliar and therefore against this form of trust planning; it is natural that we fear what we do not understand. But that does not mean it does not work. It was conceived by tax and trust professionals and has worked for over 20 years.


To read Tim’s full report “Umbrella Remuneration Trusts and Asset Trusts Explained”, please enrol as a Q Wealth Member here:

Tim Thorne works as a consultant and advisor for a leading UK-based Wealth management company specialising in trust planning. Whatever your needs, he is able to build a secure environment to suit either your individual financial requirements or those of your company. Moreover, his team of experts possess the know-how and experience to restructure your wealth so as to bring maximum benefit to you and your family.

Asset trust planning has a host of tax, asset protection and estate planning benefits that will help you achieve your personal financial goals. To find out how, email and request a free consultation with Tim

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