TRUSTS
Trusts can be a useful way to offer increased protection for your family.
A trust is a legal arrangement where a trustee/legal entity holds and manages assets on behalf of the beneficiaries. The trustee is responsible for administering the trust and making sure that the terms of the trust are followed.
Trusts can be used for a variety of purposes, including managing assets during a person’s lifetime, distributing assets after a person’s death, avoiding probate, reducing taxes, and protecting assets from creditors.
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There are several types of trusts, including revocable trusts, irrevocable trusts, living trusts, testamentary trusts, charitable trusts, and special needs trusts, each with different features and uses. Estate planning often involves the creation of trusts to achieve specific financial and estate protection.
WHEN SHOULD I CONSIDER ADDING A TRUST TO A WILL?
One of the most common purposes of the trust is for partners looking to divide ownership on the family home, to ensure that each partner legally owns a half-share. This enables them to leave their share within a trust, a trust that will then come into effect after the death of the first partner. This is a common arrangement that is useful for couples with children from a previous relationship.
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Although, trusts can be arranged in many ways, they share a common goal and that is to specify exactly how and when the assets within the trust will be passed on to the beneficiaries. A trust may be created for the financial benefit of the person making the Trust, for a surviving spouse or child, for a person with special needs, for a vulnerable person, or for a charitable purpose.
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Here are a select few examples of situations where adding a trust to your will would help:
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You have a partner, but have children from a previous relationship.
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You want to protect your estate from being assessed for care costs.
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You want to look after the interests of a vulnerable or disabled person after you die.
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You want to protect loved ones once you pass away.
WHAT HAPPENS ONCE I SETUP A TRUST?
To set up a trust, you will need to clearly identify the assets that are to be included and you will be required to appoint an individual to oversee these assets. This individual is known as the trustee. It is important to note that the trustee does not have the right to receive any benefits from the trust property.
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This right is reserved by those that the creator of the trust has identified as the individuals who will receive the trust property, in other words the equitable title belongs entirely to the beneficiaries. This distinction between the legal and equitable ownership of property is entirely unique to trusts.
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The terms of the Trust are decided at the discretion of the person creating the trust, this includes the extent of the trustees’ powers and the extent of the rights of the beneficiaries.
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The law surrounding trusts is complex and can be very difficult to navigate. It is essential to seek advice when considering the establishment of a trust. Our in-house experts will help to guide you through this process smoothly, to ensure that your financial objectives are realised.
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Due to the diverse nature of trusts, it is important to ensure that you choose the right trust. Our team are committed to providing you with clear guidance on this, and ensuring the selection of the option which will best suit your objectives.