Do you need a Trust in your Will?
Trusts are normally used to protect or preserve assets so that your family and loved ones are well provided for.
A Will Trust enables you to have greater confidence and control in how your assets will be used in the future and are a way for families to securely hold assets and pass them from one generation to another. There are many reasons why a trust might be useful to include in your Will.
Circumstances, where trusts are used in conjunction with a Will:
What is a Will Trust?
In principle, a trust is a simple concept. A trust is the formal transfer of assets (for example property, shares or cash) to a small group of people (normally two or three) with instructions that they hold the assets for the benefit of others.
A Will trust is a trust that has been written into a Will and only comes into effect after you have died. You can amend the Will trust at any time whilst you are alive, which means that you remain in complete control of your assets during your lifetime.
The trust provisions are set out in the Will. The trust document will clearly identify the trust assets, who is responsible for looking after the assets (Trustees), who is the benefit from the assets (Beneficiaries) and any rules or conditions to which both the Trustees and Beneficiaries must adhere.
• The trust provisions are set out in your Will – a ‘Will Trust’
• The person who creates the trust is called the ‘Settlor’ or ‘Testator’
• The people asked to look after assets are called the ‘Trustees’
• The people who benefit from the trust are called ‘Beneficiaries’
• Assets placed in the trust are the ‘Trust Fund’ or ‘Trust Property’
Types of Will Trust
Trust for Minors
These are referred to as Accumulation and Maintenance Trusts and are set up to look after monies for children. The idea is that the money is invested for the children until they attain an age specified by the Testator. The age can be from 18 upwards but the usual ages are 18, 21 or 25. (included as standard).
Life Interest Trust
Normally used to ensure that a spouse or partner from a later relationship will not be deprived of a place to live. It ensures that any children from a previous relationship do not lose their inheritance if the surviving spouse or partner becomes involved in a new relationship after the Testator’s death.
It can be difficult to ascertain how much money a Beneficiary is going to need and when they are going to need it. A Discretionary Trust gives Trustees the power to manage funds in the best interest of a potential Beneficiary by giving varying amounts of money to a Beneficiary, as and when they need it.
Protective Property Trust
Flexible Life Interest Trust
This type of trust shares characteristics of both a life interest and a discretionary trust. It is, as the name suggests, flexible allowing for adequate provision for the surviving spouse and also other family members but also gives the Trustees the power to rearrange assets during their lifetime and convert the trust completely.
Nil-Rate Band Discretionary Trust
This type of Trust may be helpful in reducing liability to Inheritance Tax, which is payable on death if your estate value is over a particular threshold. It is particularly useful for unmarried couples, as they cannot benefit from the spousal Inheritance Tax exemption.