Trusts are a fundamental part of estate planning if you wish to protect your estate for your loved ones.
We can either have a trust created in your Will, or during your lifetime – the difference being, when the protection begins.
It may be that you want to make sure your beneficiary’s inheritance isn’t diluted through divorce after you pass away, or that you want to make sure it gets to your loved ones in the first place and is not lost to third parties during your lifetime.
Both of which are great reasons to set up a trust, however it is key that for a trust to offer this level of protection, it is extremely important that unfortunate events (like divorce) are not on the horizon – timing is key!
Ready to Get Started?
Our guide to estate planning is a great place to start, download it for free here.
What is a Trust?
Simply put, trusts are a way of benefitting without legally owning. For when we legally own something and go through divorce, bankruptcy or go into care, everything we legally own is used in those financially assessments.
You can visualise a trust as a safe:
- The Settlors are those who start the trust and decide who the trustees and beneficiaries are, and what the rules of the trust are. They have the combination to get in and can give this combination to who they want.
- The Trustees are given this combination, and their job is to ensure the beneficiaries benefit in the right way and at the right time, often using a letter of wishes the Settlor wrote.
- The Beneficiaries are those who get to enjoy what is inside the safe, the trustees can hold their hand and take them inside. The beneficiaries get to benefit from what is inside the safe, but they do not legally own those assets, resulting in protection against third parties (anyone who doesn’t have the code to the safe).
If you ever wondered why, it seems the rich get richer, using trusts to protect their wealth, and even mitigate tax is an extremely important factor.
What are the benefits of having a Trust?
There are many reasons why you might want to set up a trust, and these reasons will differ from person to person. Here are just a few:
- To ensure your loved ones are the only ones that benefit
- To protect against divorce or remarriage
- To protect against financial hardship
- To help reduce probate fees
- To speed up estate administration
- To protect against third parties
- To help vulnerable beneficiaries benefit in the right way (and not effect any benefits they may receive)
- To give the right people control
- To help mitigate Inheritance Tax
- To prevent post-death family disputes
What can we do?
We’re here to help you learn more about how you can protect your estate. Our expert team are here to help simplify the process and make it easy by:
- Explaining your options in detail
- Assessing your risk levels
- Advising on advantages and disadvantages of potential solutions
- Helping you decide on the right course of action
- Considering your individual circumstances
Speak to an expert
One reason why trusts and asset protection can be complicated is there are several different options available, varying in the security it can give you and your loved ones. This means, without professional advice, it can be difficult to know what suits you best.
From lifetime gifts to discretionary trusts, estate planning can have many difference forms. For some, using our Will writing service is enough. However, there can often be a need for the greater safeguarding of assets.
There are aspects of estate planning that are not easily found, and often only learnt through years of experience. Speak to one of our experts so they can share this experience with you.
FAQ’s
You can put assets that you own into trust, whether that is a house or even money. There are limits to what you can put in trust during your lifetime, so be certain to speak to an adviser who specialises in estate planning.
It depends on whether you set up the trust with benefit or without benefit. If you put your main residence in trust, assuming you still live there, this would be set up with benefit, therefore this does not mitigate IHT. If however you wanted to set up a Gift Trust for children, if you do not have any benefit, this would mitigate IHT and would be out of your estate after 7 years (whilst maintaining the protection and control of the trust).
If you would like to know how we use trusts to help our clients mitigate IHT, please get in touch.
There is the settlor, the person/people who settle the asset into trust. The trustee’s, the people who manage what is in the trust and distribute the assets to the chosen beneficiaries. It is the trustee’s job to ensure the beneficiaries benefit in the right way at the right time.
Assuming the trustee’s and beneficiaries wish to, a trust can last up to 125 years. It is possible to dissolve the trust and have what is inside, however please get advice before you do so, as you will also lose the protection of the trust.
Putting assets in trust during your lifetime can be a great way of protecting your estate for loved ones assuming it was done prior to and without knowledge of the events it was designed to protect against.
For instance, putting an asset in trust prior to going through a divorce will not protect that asset.
Ready to Get Started?
Our legal help is professional, affordable and our Estate Planners will look at your specific needs individually. We will ensure your service is tailored to you – every step of the way.
If you would like to speak to one of our Estate Planners to arrange your free, no obligation consultation, please get in touch.
Send us an email
Email - info@redwoodestateplanning.co.uk
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Telephone - 01920 481299
Locate Us
Redwood Wills & Estate Planning, North Cottage,
Stanstead Road, Ware, SG12 8PS, England.
