What Is A Trust? A trust belongs to the legal category of "a body of persons - corporate", well that's all well and good, but what does that mean? Put simply their are two types of "body" Incorporate - or people to you and me, and corporate - legal entities that survive after our death.
It is the ability for a Trust to live on after you have passed away that makes such them such a valuable tool for Estate Planning Purposes.
They're Only For The Rich right? This is a very common misconception and one that both the Tax Authorities and the Local Government are only too happy to have continue.
Let's consider first the word "Rich", what does that mean to you? One million, Two million, Five million...
few would deny that anyone that fortunate is certainly comfortably off, but rich? It comes a shock therefore when you realise that there are two different definitions of the word rich that are applied in the following circumstances Her Majesty's Revenue & Customs (HMRC) - the dreaded tax man - allow you to own assets up to a certain value (Nil Rate Band) before you become liable to pay Inheritance Tax.
As at the 2010/2011 tax year, this is set at only £325,000, the surplus is taxed at 40% and until the tax is paid your beneficiaries can't touch any of your assets.
If you are unfortunate enough to have to go into residential care through failing health, then this is administered by the Local Authority (LA), more commonly known as the County Council.
If you own assets worth more than a certain value then you will be required to pay for your care - in 2011 this is often in the region of £40,000 a year.
But that's all right though as you have £325,000 to play with don't you? Unfortunately not, in the 2010/2011 tax year, if you have assets in excess of £23,250 then you will pay the full cost of your care.
Only once you have "stuff" left of less than £13,000 does it become free.
So that lifetime's effort and savings get simply drained away.
What Can You Do With One? There are several things that you can do with one or more trusts, some examples are

• shield assets from the tax authority
• prevent the sale of the family home to pay for residential care
• if your children get divorced prevent their ex from taking their inheritance
• protect the inheritance of children from prior relationships

Can The Tax Man challenge It? In a word, no.
Trusts are the tax authority recommended way of family wealth planning to ensure that value is retained for future generations.
Provided that you do it in time and don't leave it until the last minute.
When Should It Be Done.
Now, really.
If you are a single person with no children it is essential to protect your own financial future.
If you are a couple with no children it protects your joint assets from seizure.
If you have children it is essential for their future financial well being.
Why now? Well you can leave it one day too late.