What Are Trusts?
The term Trust often causes confusion and concern. This is mainly due to the term being used so freely in many different contexts.
In essence, a trust is a legal framework designed to protect assets, such as property, savings & investments when your main objective is NOT instant access
Reasons to use a Trust include:
Protecting an inheritance for a child until they reach a suitable age to gain full control of that inheritance personally;
Protecting assets for a disabled person who may never be able to gain full control of those assets;
Reduction of a potential Inheritance Tax (IHT) liability upon death by gifting assets into a Trust before death;
Reduction of potential Long Term Care Fees for a surviving spouse after the death of their spouse.
There are many other reasons that people use Trusts. There are 2 general principles to be aware of when considering a Trust.
1. A Trust generated upon death by using a Will;
A Trust generated by a Will can ensure that a surviving spouse may continue to use your assets but those assets are not legally owned by that surviving spouse but a delayed gift to other beneficiaries such as children. Benefits of using a Will Trust include the fact that those assets are not considered to be owned by the surviving spouse and, thus, not assessable when calculating Long Term Care Fees.
Also, A Will Trust ensures that your assets ultimately pass to your desired beneficiaries rather than hoping a surviving spouse will honour your wishes.
These trusts are relatively inexpensive to arrange as they are built into your Will, and thus, built into the cost of arranging your Will. Please refer to our "Fees" page for further details.
2. A Trust generated before death (A Living Trust)
Living Trusts perform a different function. Passing assets into a trust whilst you are alive may reduce future potential Inheritance Tax liabilities. This will also ensure that you do not require a Probate Certificate, upon death, for those assets and are therefore not vulnerable if someone attempts to contest your Will.
These trusts can vary dramatically in cost depending upon individual circumstances and requirements.
Taxation of Trusts
Before setting up a trust there may be tax implications which you MUST consider before proceeding.
We are happy to offer you no obligation, no consultation fee and confidential guidance.