There are different types of trusts which can form part of your will when your will is drafted. These include life interest trusts, also known as Flexible Life Interest Trusts, Discretionary Trusts, Bereaved Minor Trusts and 18-25 Trusts.
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What is a will trust?
A will trust can protect your most valuable assets for your beneficiaries. Trustees manage the trust on behalf of the beneficiaries. The and a fiduciary duty of care and as such you should choose your Trustees carefully. A professional Trustee, such as Slater & Gordon Trust Corporation Limited can also be appointed either instead or, or in conjunction with, a lay Trustee.
What are the different types of will trusts?
There are several different types of will trusts which may form part of your will. They could include:
Life interest trusts, where a beneficiary may live in a property owned by the trust, or receive income from it.
Flexible life interest trusts, where trustees are given power to take capital from the trust during their lifetime.
Discretionary trusts which can be more flexible by allowing appointed Trustees to manage your estate and decide who to distribute it out to and when.
Bereaved minor trusts can be set up for the child to inherit only when they turn 18, and similarly an 18-25 trust delays the age a child can inherit.
Why should I setup a will trust?
There are many reasons and advantages for setting up a will trust as follows:
- To provide future security for family and future generations, We would recommend a combination of financial planning, lifetime giving and gifts on death be considered in order to mitigate tax both for the individual concerned, and potentially for future generations.
- The assets in the trust are protected against risks such as third party claims, divorce or bankruptcy.
- With a will trust you can provide financial care for your children or grandchildren, if they are not yet over 18, and can stipulate if you wish your children to receive their inheritance at a certain age e.g 21,25 or older. .
If you create a will trust you set up all the conditions now, but the trust is only activated after you have passed away.
Why should I consider legal assistance when setting up a will trust?
Trusts are a complex subject and the timing, wording and other circumstances can be very important when setting up a will trust. We strongly advise working with an expert solicitor when setting one up, as they can help with the following:
- Which type of trust is best for you
- Which conditions you should include
- If you can save taxes with your trust
- Ensuring your trust does not conflict with your will
Why can I not just name the beneficiaries in my will trust?
Your beneficiaries might not be in the best place to inherit your estate at the time you pass away.
For example, if a beneficiary is disabled, a receipt of a large sum may invalidate their right to receive Personal Independent Payments and likewise if any of the beneficiaries are applying for a full Maintenance Loan for higher education the government may try to claim that receipt of inheritance should be classed as part of your income (even though it is a capital payment).
What if a trust and a will conflict?
Contradictory instructions will cause confusion. If you have a trust and a will, we advise you to have both documents checked by a solicitor to ensure they are not contradictory.
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