Using Trusts for Estate and IHT Planning
Trusts & Asset Preservation
What is a Trust?
A Trust is a legal instrument used to hold assets. One or more settlors can put cash or assets into a Trust, and appoint Trustees to run the Trust for intended beneficiaries. The Trustees must run the Trust in accordance with the Trust wording, and should also consider the settlor's letter of wishes if there is one.
It sounds rather complicated, but once you start using trusts, they become much more simple to understand. You should always use a regulated law firm to set up the trust deed, and create the trust, and the benefits can outweigh the costs by hundreds of thousands of pounds if set up correctly.
How might a Trust be used?
Trusts cam be used to protect property and assets to ensure that they are not diminished unnecessarily and to ensure they are not taken from your intended beneficiaries where possible.
Lifetime trusts can help avoid probate and potentially inheritance tax when you die. Will trusts that are set up on your death can control the distribution of your assets, protecting them from care home assessment, divorce, bankruptcy and other financial problems of beneficiaries, the complications of a surviving spouse remarrying and much, much more.
Trusts can also be used to protect assets for vulnerable beneficiaries such as those that are disabled, mentally ill, or minors under 18.
Are all Trusts the same?
No. Trusts can be very different from each other. The way they are set up, the types of beneficiary and the general wording of the Trust can determine how it is taxed for income tax, capital gains tax and inheritance tax. Different trusts can have the ownership of the assets viewed in different ways too. The amount put into the trust and the current balance can also make a difference to how the trust is treated.
It is very important to use a professional, experienced law firm when it comes to trusts. A simple mistake could end up leaving the assets unprotected, or could end up costing hundreds of thousands of pounds in lost allowances or unnecessary tax.
Goodwills Legal Services Ltd is a regulated by the CLC, and is also a STEP member accredited firm. One which is owned by two solicitors, both of which are bound to abide by the code of SRA. STEP is the Society of Trust and Estate Practitioners and one of the most regarded professional bodies in this field.
The range of Trusts available through Goodwills Legal Services Ltd.
Click a link below to see more information about that type of Trust and how it can be beneficial to you when estate planning or making your Will.