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Trusts.
What is a Trust?
Protect your property and other assets throughout your lifetime and beyond.
A Trust is a legal arrangement which is normally created by a Trust Deed or through a Will. In creating a Trust you choose people or professionals to become trustees to protect your assets for the use and benefit of others, known as beneficiaries.
By placing your property and other assets in a Trust you protect them from an uncertain future and certain external threats.​
Typical Property Trusts.
Protective Property Trust
Traditionally property is owned as Joint Tenants. In this case when one partner dies the whole property bypasses their estate and passes to the surviving co-owner. The whole property then becomes part of the survivor’s estate when they pass away. However, if the joint property ownership is changed to Tenants in Common, when one owner passes away their share passes into their estate and is distributed under the terms of their Will. The Will can then instruct that this share is passed into a Protective Property Trust where it is ringfenced and protected. This ensures:
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A Life Interest in the share of the property is given to the surviving owner
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Ultimate beneficiaries, for example children, are guaranteed to receive their share in the future
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The share of the property held in trust is protected from third party claims
Asset Protection Trust
This Trust is created during your lifetime. Your property and assets are immediately transferred into the Trust to be held by the Trustees. However, you can retain the right to enjoy the property, held in Trust, for the rest of your lifetime.
Then, when you pass away, the property and all assets in the Trust are passed on to your beneficiaries via discretionary powers given to the trustees.
This allows you to set out your wishes for beneficiaries to receive their bequests, for example by attaining a certain age, using the assets for certain things or being clear of debt.
The Asset Protection Trust gives maximum protection and flexibility for the future of your property and assets.
What Trusts do and do not achieve?
What can a Trust do?
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A Trust can set restrictions on when your beneficiaries inherit.
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A Trust can record instructions on how your estate is to be managed after you pass away, by your chosen Trustees.
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A Trust can protect your assets, including your home from side-ways disinheritance.
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A Trust can also include restrictions ensuring that a vulnerable beneficiary is protected. This includes:
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Making sure that means tested benefits are not lost through receipt of a large lump sum.
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Delaying the inheritance until beneficiaries are free from active addiction.
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Shielding estate funds from the abusive, controlling or unsuitable partner of a beneficiary.
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Delaying the inheritance to a beneficiary who is bankrupt until their IVA has been completed.
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What a Trust doesn’t do?
There are a couple of popular misconceptions to consider when planning for your Trust, alongside the benefits that it will provide.
Some people believe that you can use a Trust to avoid paying for a care home should you need one in the future. However, avoiding fees in this way is known as a Deliberate Deprivation of Assets. We do not condone or advise this practice, be that through Trusts or other means.
Also, there is a misconception that putting your assets in a Trust means you will avoid Inheritance Tax. This is not the true. There are legal ways in which Inheritance Tax liability can be reduced. Our advisors offer advice on the best solutions designed to each clients’ requirements during the planning of the Trust.
