There are various types of trust we can set up, depending on the circumstances
Having a Discretionary Trust in your Will means assets can be directed into it on your death for the potential benefit of any number of beneficiaries you choose. Your estate can be paid in any amounts to any of the potential beneficiaries at the trustees' discretion. This means that nobody has an absolute right to benefit from the trust, so this can be useful for example, where a beneficiary has an impending divorce (the trust may protect their inheritance from being part of a divorce settlement or bankruptcy (the trust may protect their inheritance until such time as the bankrupt person has been discharged) or the beneficiary is in receipt of means-tested benefits (the trust can protect their inheritance from being assessed as part of their entitlement to benefits). In some cases a Disabled Discretionary Trust may be more appropriate.
A more straightforward use for a Discretionary Trust could be where you may make future gifts to, for example your children, during your lifetime and so are unsure in what proportions you might want your estate to pass, to each of them on your death. Perhaps you would like to give your trustees flexibility to make the decisions at the time by taking into account a letter of wishes you might write to them.
Another type of Discretionary Trust may be useful to mitigate inheritance tax where a couple are unmarried and do not have the more favourable tax position that married couples and civil partners do.
Property Protection Trusts
For most people their most valuable asset is the family home.
One of the main concerns people in a relationship have is what would happen if you died and your surviving spouse or partner went on to meet someone new?
It's possible that instead of leaving the house to your children they could leave it to the new partner or spouse. Alternatively, you may have children from a previous relationship for whom you want to protect your half of the house.
We can incorporate a special type of trust in your will, which can ensure that your share of the family home is preserved for your children whilst still allowing your surviving spouse or partner to continue to live in it.
For more elderly people, this type of trust can also be very useful in protecting your house from being used to fund residential care home fees should you need to enter long term care.
Flexible Life Interest Trusts
Property Protection Trust Wills are very useful if you are house-rich, but what if you also wanted to ensure your hard earned money passed to your children too, instead of going to any new partner of your surviving spouse or partner?
Flexible Life Interest Trust Wills are a great way of ensuring that as well the share of the house you own, but also your capital passes to your children, whilst not only allowing your partner to continue to live in your share of the house until they die, but also being able to use the income from any capital invested.
Again this type of trust is useful in care fees mitigation for those who are concerned about losing their wealth and house to funding their long term residential care.
Business Property Trusts
You may own a business that is eligible for an inheritance tax relief known as Business Property Relief, applicable to most types of trading or service businesses. Under some circumstances this relief may not be fully utilised, resulting in a much larger than necessary inheritance tax bill.
A Business Property Trust is a type of discretionary trust aimed at avoiding this. However, more importantly those people with businesses virtually never plan for the passing on of their shares in their businesses, resulting in unforeseen consequences for the remaining co-owners as well as tax consequences.
APS Legal & ASSOCIATES can provide expert specialist advice in this area.