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Setting up a discretionary trust in Ireland is a complex endeavour that requires careful planning and consideration. Although not an exhaustive list of considerations, here are five important things to keep in mind prior to setting up a discretionary trust:
1. Objectives and Beneficiaries: Clearly define the objectives of the trust and identify the beneficiaries you intend to provide for, considering their needs and circumstances of potential both now and in the future.
Since trusts offer flexibility, think about how the trust can adapt to changing family dynamics or other factors.
2. Choice of Trustee: Selecting the right trustee is crucial. The trustee will have significant authority and responsibility over managing and distributing the trust’s assets. It is therefore vital that you choose someone who is trustworthy, knowledgeable about trust law and financial matters, and able to carry out their duties impartially.
3. Trust Deed and Terms: Work with a legal professional to draft a comprehensive trust deed. This document outlines the rules, powers, and parameters of the trust, including how the trustee will exercise their discretion in making distributions. Ensure that the terms of the trust reflect your intentions accurately and cover various scenarios.
4. Tax Implications: Understand the tax implications associated with creating and managing a discretionary trust in Ireland. This includes considering potential taxes on contributions, distributions, and inheritance tax.
Consulting a tax advisor can help you navigate the tax landscape and make informed decisions.
5. Flexibility and Review: Anticipate potential changes in circumstances, family dynamics, and legal regulations. Build flexibility into the trust’s terms to allow for adjustments as needed. Regularly review the trust to ensure it remains aligned with your intentions and relevant to the evolving needs of beneficiaries.
It is important to remember that each person’s situation is unique when it comes to discretionary trusts, and the specifics of setting one up will ultimately depend on your individual goals, family dynamics, and financial circumstances.
We strongly advise that you seek professional advice from a solicitor who specialises in trust law, and tax advisors who are well-versed in the intricacies of Irish law and taxation. By carefully considering these factors and seeking expert guidance, you can create a discretionary trust that effectively achieves your intended goals while complying with legal requirements.
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*In contentious business, a solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement.*