Trusts

If you are unsure of the type of trust that you may require please remember we are here to help. If you are unsure if you need a trust at all please watch this video

Protective Property Trusts

The basic premise is that on first death your share of any property you own is passed into a trust rather than straight to a beneficiary. The Trust is set up to accept the share of the property and at the same time a Lifetime interest is created for the remaining owner of the other share of the property (normally the remaining spouse or partner) this lifetime interest allows the remaining owner to

Sell the property if they wish to, in conjunction with the trust
Buy another property with the proceeds of the sale of the original property. If downsizing the surplus cash can be split with the remaining owner getting 50% of the surplus cash
The powers of the Trust allows the remaining spouse/partner to borrow any cash in the Trust with or without interest as deemed by the trustees (remember that the remaining spouse/partner would normally be a beneficiary and a Trustee of the Trust)
The property cannot be sold without the permission of the Lifetime Tenant (normally the remaining spouse/partner)
The lifetime tenant cannot be evicted from the house for the rest of their Lives.
The ultimate beneficiaries of the Trust would normally be the children after second death.

Living Trusts

A living trust is a legal document created by you (the grantor) during your lifetime. Just like a will, a living trust spells out exactly what your desires are with regard to your assets, your dependents, and your heirs. The big difference is that a will becomes effective only after you die and your will has been entered into probate. A living trust bypasses the costly and time-consuming process of probate, enabling your successor trustee (who fills basically the same role as an executor of a will) to carry out your instructions as documented in your living trust at your death, and also if you’re unable to manage your financial, healthcare, and legal affairs due to incapacity.

Other Trusts

Disabled Persons Trusts

For those wishing to make provision for those suffering from a mental or severe physical disability, whether that be themselves or another person, may wish to look at the possibility of creating a Disabled Persons Trust.

There is the option of making provision for a disabled person in lifetime and/or through a Will. As a consequence of the Finance Act 2006 substantial changes took place regarding trusts. The majority of trusts now all have the same tax regime but those which benefit a disabled person are an exception to the rule and may attract favourable tax treatment. Therefore any trust which is established could take advantage of the inheritance tax, income tax and capital gains tax relief available if the trust meets certain prescribed conditions.

18 to 25 Trust

These trusts are often setup for parents who seek to increase the age on which their children are to inherit to an age between 18 and 25. This form of trust is suitable therefore for those who do not wish their children to have the right to receive anything until a specified age, not exceeding 25, and believe that their child’s inheritance is best managed by the Trustees of their Will until then and accept that there may be an extra IHT bill. These trusts are of particular interest to parents whose children have impaired life-expectancy and the parents want to retain the ability to pass on the inheritance if their child dies before the age of 25 rather than have it pass under the child’s own Will.