At the end of the last instalment we discussed how old money stop their wealth from being diluted. We answered the question but if you, like me, loved a field trip at school you can answer it thus:

1 – Stand anywhere in Mayfair.

2 – Throw a stone (underarm mind, you don’t want to hurt anyone).

3 – Wherever that stone lands is probably owned by a trust that’s been existence for hundreds of years.

As you’ll agree, as field experiments go that one could be no more scientific if it found a way to involve hamsters, a maze, and a Cheesy Wotsit.

My point is this; the answer, like most answers, was hiding in plain sight, you just had to know where to look.

From a field trip to a History lesson, and in this one I’ll take you back to 1677 to the occasion of the marriage of Sir Thomas Grosvenor (21) and Mary Davies (12!).

As tradition dictated, Mary’s father brought forth a dowry. Not of cash but of land. Specifically, 300 or so acres of marshland west of London.

It had very little inherent value but, London was moving west at a rate of knots which gave it clear upside potential. We know this land now as the areas of Mayfair, Park Lane, and Belgravia.

Sir Thomas was old money, and he knew what was what, so he built a castle around that land. The castle walls were not made of stone, they were made of equity. Thick walls that those who bore ill will towards the family could not break down.

This was the Grosvenor Estate Trust which now employs thousands of people and holds over £20 billion of assets worldwide.

When the 6th Duke of Westminster passed away in September 2016 and passed control to the 7th Duke no inheritance tax (IHT) was paid. This was because control of the trust passed, but not ownership. The ownership lay with the trust, and trusts do not die.

Trusts do however come in plenty of flavours. They can be onshore or offshore. They can be discretionary or have specific purposes.

They all involve a settlor (the party transferring or settling the assets), the trust (managed by the trustees) and the beneficiary (those to whom go the spoils).

Trusts protect assets and protect income. In some circumstances they change the way that income, gain, and passing are taxed. They offer flexibility and protection and they can offer this to anyone.

The time has passed when you had to be old money to benefit from a structure like this. You can build your own castle. A castle for the modern age.

It can protect your wealth and allow you to pass it on to the next generation in a way that you decide. It can give you flexibility as to how gains and income and succession are taxed.

It’s called the Umbrella Asset Trust, and I’ll reveal how it works next time.

All the best,

Stephen Wallis

Copyrighted and published by FOAR Ltd