If your family’s circumstances suddenly change or you want to protect any inheritance, you might contemplate having your Will redrafted to contain something known as a Trust.
An example circumstance when people consider including a ‘Trust’ in their will, is if their son or daughter is their sole beneficiary, but then marries someone they’re not very fond of.
In a situation like this, to protect any inheritance, you could set up a Trust to ensure assets pass directly to your grandchildren on your son/daughter’s death, rather than their partner.
Alternatively, you may consider a trust because you want to protect assets for those who are too young to manage their own affairs.
So, in a nutshell, people consider making a Trust because it allows assets such as property to be managed and protected for the beneficiaries in your Will. Assets are looked after by a third party, known as the ‘Trustee’, to avoid anything passing to someone you don’t want to inherit. Here are some FAQs on Trusts and lifetime planning.
What is a trust?
A trust is a legal agreement between three parties:
- The trust maker: This is the person who creates the trust agreement.
- The trustee: This person or entity is responsible for managing the property the trustmaker transfers into and titles in the name of the trust.
- The beneficiary or beneficiaries: These people or entities receive the benefits of the property titled in the name of the trust.
Generally, whoever owns assets also benefits from them. But in a trust, ownership and benefit are separated. The trustees own and look after the assets of the trust on behalf of the beneficiaries.
Therefore, the trustees have a duty to act in the interests of the beneficiaries.
What is a lifetime trust and why is it recommended?
Placing your property or other assets in trust whilst you are still alive can provide several benefits to you and your family, including:
- Protecting your home and other assets being used to pay for care home fees
- Avoiding Inheritance Tax
- Protecting the assets that you want to leave to your children from the financial consequences of the children’s future marriages or relationships breaking down.
What is a Will trust?
A will trust – also known as a testamentary trust – is created within your will to permit you to protect property you hope to pass on to your family.
Dissimilar to a lifetime trust, a will trust will only come into force once you pass away.
For more information and legal advice on trusts, lifetime planning and beneficiary trusts, contact JMR Solicitors, who will handle your case with sensitivity, integrity and professionalism.