A Trust can be set up through your Will to help protect and control wealth for the benefit of your family/loved ones. Trusts enable people to place assets under the control of others, so that they have full responsibility to manage those assets for the benefit of whomever is chosen, according to a set of instructions. There are many different types of trusts and at Tyto Law we can advise you on the different benefits to assess which is appropriate for your circumstances.
Trusts can be hugely beneficial but they can also be complex to set up. We can advise on the timing, beneficiaries and any tax implication on the duties of a trustee.
The main benefits of arranging a trust are:
To control and protect family assets
One of the principal reasons for creating trusts in a will is to ensure that some control is maintained over family assets.
For example, by placing property or assets in trust, you can ensure that it is not disposed of completely, but continues to be invested or used to generate income and provide for the beneficiaries.
To avoid someone inheriting when they are too young
You may want to prevent someone from receiving part of their inheritance – or all of it – until they have reached a certain age.
To protect the family home from being sold in order to pay for care home fees
It is a worry to some that after they have died, their partner may have to sell their family home in order to pay the costs of residential care; and it is often thought that this can be prevented by using the will to put the property in trust.
However, it isn’t necessarily as simple as that. It may depend on whether the property was jointly owned as joint tenants or tenants in common. If you were tenants in common (each has a defined share) then you can leave your own share on trust for a surviving spouse or civil partner for their life, reverting to some other beneficiaries afterwards. A sale of the property could not then be forced.
To reduce Inheritance Tax Liability
As a rule, inheritance tax of 40% is payable on anything over £325,000 of the value of your estate. But both the amount of the estate that is taxable, and the rate of tax payable, can be more advantageously planned by putting property in trust.
There are a number of exceptions to this, and it can be quite complex to plan; so please speak to us and we can advise you on the best way of doing this.
To arrange a life interest
You may wish to give a life interest to your partner, and then have your estate pass intact to some other beneficiaries.
Typically this might be if you are in a second or subsequent marriage. On your death you might wish your spouse to be able to continue living in the family home for their lifetime, and afterwards for the home to go to your children from a previous marriage.
A life interest will trust puts the house on trust for your spouse for their lifetime, and then for the children. Your spouse would not be able to dispose of the property (except perhaps to buy an alternative home, which would itself then be on trust).
At Tyto Law we will discuss your current circumstances with you and explain all available options that you have. Please contact Ollie and the team at Tyto Law on 01724 642 842 or by email on [email protected].