The Goodwills Family Trust
This trust is designed to be written into a Will. If you are looking for a Lifetime Discretionary Trust then please click here.
What is a Family Trust?
A Family Trust is a discretionary Trust that can be written into your Will. Importantly, this trust is a Trust designed to run for up to 125 years. The testator gifts the residue of their estate to the Trust and the trustees may make distributions of income and/or capital or loans to anyone within the beneficiary class. This allows the testators family to mitigate their own IHT liability and that of future generations.
An 'open class' of beneficiaries will be nominated to give maximum flexibility to your Trustees. Remember, the Trustees have the ultimate discretion to honour beneficiaries so it is important that your wishes are explained within your Letter of Wishes
What are the main benefits of a Family Trust?
A Family trust can be very useful when it comes to Estate Planning. The following benefits make it a popular choice even though it does not have any immediate IHT benefits, instead the benefits fall to future generations.
When set up correctly, a Family Trust could have the following benefits:
- The trustees have control over the assets in the Trust. They can distribute the assets and income from the assets or loan assets to beneficiaries in line with the trust deed and the letter of wishes.
- This level of control can help protect the assets if a beneficiary is expecting to pay a divorce settlement, gets into financial trouble, requires support or aid from the local authority or the state, or develops an addiction or a mental health illness
- When potential beneficiaries die, as the money in the Trust does not belong to the beneficiary, it can pass through to their beneficiaries without being subject to Inheritance Tax, potentially saving a lot of money.
- Grandchildren and further descendents can be beneficiaries of this trust, even if they are not born when the trust is set up, ensuring that the Family Trust can continue to be beneficial and relevant for many years to come.
The trust is treated as a Discretionary Trust, and has the same tax rules as any other discretionary trust.
A Lifetime Discretionary Trust can be set up in a similar way instead. Although it is more expensive than a Family Trust at the outset, it can protect your assets straight away, help avoid probate, and mitigate inheritance tax should you survive seven years after making the trust. You could have reduced Inheritance Tax liability if you survive 3 years after creating the trust.
Get professional legal advice based on your exact personal circumstances
This is a concise summary of the Family Trust, and you should seek professional advice before making a decision to create a Trust.
Goodwills Legal Services Ltd can create a Family Trust, act as a professional Trustee if you require it, and can provide information and advice based on your specific individual circumstances. Goodwills Legal Services Ltd is a STEP member accredited firm and is regulated by law, by the CLC.
Goodwills Wilts and Glos can provide a home visit service within many parts of Wiltshire and Gloucestershire or you can visit a senior client consultant in their offices in Malmesbury. Please contact us for an initial consultation or should you have any questions.