If you have assets such as land, property, cars, money and investments, you’ll want to be as sure as you can be that they go to your chosen beneficiaries in the way you wish so that your loved ones have added financial stability in the future, and also that you’ve left them a meaningful legacy.
But hang on, doesn’t that sound a bit like taking out a Will?
Well, yes, but there’s a key difference in that a Will only comes into effect after you pass away, whereas a Trust can be implemented from the moment it is set up. That can give you the confidence, potential certainty, and peace of mind you want moving forwards, so you can be as sure as you can be that your family will be provided for further down the line.
At the same time, setting up a Trust can also have many tax benefits, and means your chosen beneficiaries won’t have to go through the Probate process following your death.
So it’s well worth exploring this option, seeking relevant professional financial advice of course, and seeing if this is a way forward for you for some of your assets in the context of your own income and capital requirements.
What types of Trusts are there?
There are several different types of Trusts you can look at, depending on your specific wishes and circumstances. Each type of trust is taxed differently. Here are just a few examples:
Will Trust
This could be a good option if you’re married or in a civil partnership, as it can make sure your surviving partner can continue living in your property following your death. It can also ensure a share of the property can be included in your inheritance.
Interest in Possession Trusts
These are trusts where the trustee must pass on all trust income from the assets you have settled to the beneficiary as it arises (less any expenses).
Discretionary Trust
This permits trustees to decide how to use the income from the trust and choose how much money beneficiaries will receive. That means it’s a good option for those who want maximum flexibility if their circumstances change.
Accumulation Trust
This is where the trustees can accumulate income within the trust and add it to the trust’s capital. They may also be able to pay income out, as with discretionary trusts.
Settlor-interested Trust
This is where the settlor or their spouse or civil partner benefits from the trust and could be:
an Interest in Possession Trust
an Accumulation Trust
a Discretionary Trust
Bare Trust
This provides or allows for the option of passing assets onto a young person when they reach the age of 18 or over (England and Wales) or 16 and over (in Scotland). That means the assets in the Trust will initially be held in the trustee’s name, rather than the beneficiary’s, and the trustee will be responsible for looking after them until the chosen beneficiary hits the age when they are able to access the trust themselves – this means the assets set aside by the settlor will always go directly to the intended beneficiary.
Trusts for Vulnerable Beneficiaries
This is a good option if you have a chosen beneficiary who lacks capacity to make decisions for themselves, and will therefore need financial support and help with managing their affairs. This could include a child, an under-18 who has lost a parent, or somebody with a disability.
We are here now to help so please do not hesitate to contact us regarding your financial planning situation. Reviews and our Lifetime Financial Planning Service are all part of our added-value services for our clients.
We have set out above what is only a brief summary of some key points that involve quite complex considerations. Always seek relevant professional advice before taking, or refraining from taking, any action.
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