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 arrangement where a person or group (the trustee) holds assets for the benefit of others (the beneficiaries) according to the terms specified in a trust deed. Trusts are established to manage and protect assets, provide for beneficiaries, and facilitate estate planning.
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.
What are the benefits of setting up a trust?
Setting up a trust can provide various benefits, such as:
- Preserving and protecting assets for future generations
- Mitigating inheritance tax liabilities
- Ensuring the efficient distribution of assets
- Providing for vulnerable or disabled beneficiaries
- Maintaining privacy, as trusts can be confidential arrangements
What are the different types of trusts?
There are various types of trusts, including:
- Discretionary trusts
- Life interest trusts
- Bare trusts
- Charitable trusts
- Family trusts
- Asset protection trusts
- Special needs trusts
What is lifetime planning?
Lifetime planning refers to the process of making financial and legal arrangements during your lifetime to protect your assets and ensure they are distributed according to your wishes. It involves creating wills, trusts, and other mechanisms to manage your affairs and plan for the future.
Why is lifetime planning important?
Lifetime planning is important because it allows you to:
- Protect and preserve your assets during your lifetime
- Plan for incapacity or medical emergencies
- Minimise tax liabilities
- Ensure that your loved ones are provided for
- Maintain control over the distribution of your assets
What happens after someone passes away?
After someone passes away, their estate enters into the probate process. This involves:
- Identifying and valuing the assets and liabilities of the deceased
- Settling any outstanding debts and taxes
- Distributing the remaining assets to the beneficiaries according to the terms of the will or the rules of intestacy
What is probate?
Probate is the legal process that validates a deceased person’s will and grants the executor the authority to administer the estate. It involves obtaining a Grant of Probate or Letters of Administration, depending on whether there is a will or not.
Do all estates require probate?
Not all estates require probate. Whether or not probate is necessary depends on the size of the estate and the nature of the assets. Small estates or assets held in joint tenancy may not require probate.
What is a beneficiary trust?
A: A beneficiary trust is a type of trust that holds assets for the benefit of one or more beneficiaries. It allows the trustee to manage and distribute the assets according to the terms specified in the trust deed.
What are the advantages of using beneficiary trusts?
Beneficiary trusts offer several advantages, such as:
- Protecting assets from creditors
- Providing for vulnerable beneficiaries
- Controlling the timing and manner of asset distributions
- Minimising inheritance tax liabilities
- Ensuring that assets are preserved for future generations
Can I be a beneficiary of my own trust?
Yes, it is possible to be a beneficiary of your own trust. In such cases, you may establish a self-settled trust, also known as a “grantor trust,” which provides asset protection and estate planning benefits.
We hope these FAQs have provided helpful information about Trusts, Lifetime Planning, Post Death, and Beneficiary Trusts based on UK law. If you have further questions or require personalised assistance, please feel free to contact our experienced team at JMR Solicitors. Call us at 0161 491 3933 or email us at firstname.lastname@example.org.