Trusts can be used to protect your wealth for surviving members of the family following your death. They can be used to define various shares in property. They can also be used for charitable purposes or simply as a means to support someone who may be in financial difficulties or may simply not understand how to deal with money. Trusts can be set up by Deed during a client’s lifetime or by their Will which comes into being on their death.
There are a range of different trusts available, including:
This is where cash or other assets are put in trust for two or more people so there are a number of beneficiaries who can benefit at the Trustee’s discretion. There can be a principal beneficiary and not all potential beneficiaries will receive a benefit. Clients are encouraged to give guidance to the Trustees in a letter of wishes.
Discretionary Trusts are useful for holding assets out of a client’s estate and have their own Inheritance Tax Nil threshold and tax return.
Life Interest Trusts
This Trust can protect part of your home from residential care home fees. It is often used in Wills where the person making the Will wishes to provide for a spouse of a second marriage to receive income from an asset or property whilst preserving the actual asset or property for the benefit of someone else at a later date. The second spouse would then be able to remain living in the home on the basis that the house is passed to the children of the first marriage on death of the second spouse.
Declarations of Trust
These are used to define interests in land or property where perhaps one party has put more into the purchase than the other. This document sets out how the eventual sale proceeds should be divided.