A Trust is simply a home to hold assets on behalf of others (beneficiaries) for a time in the future. Trusts are a great mechanism to protect both people and assets (property, cash, investments etc) against divorce, care, tax & creditors.
Testamentary Trust:
Not immediate, as they don’t ‘come to life’ until you die (triggered by your Last Will & Testament).
Uses & Benefits:
💡 Great for bloodline protection and planning (children & grandchildren)
💡Outlines when Trust Assets should be distributed based on: ✅️Age, marriage, education & medical needs of beneficiaries
✅️Single distribution or phased/incremental distributions.
2 Types:
1. Separate Trusts – 1 Trust per beneficiary
2. Family Trusts – One combined Trust for whole family
The type depends upon the needs of beneficiaries, i.e., when one child might need more financial support than another.
Lifetime Trust:
Are Immediate. They are created during your lifetime, and ‘opened with a nominal £10.
Uses & Benefits:
💡Allows the person creating the Trust (Settlor) to have access, and control over Trust assets.
💡Discretion and control over how Trust assets are managed.
💡Great vehicle to protect beneficiaries and assets (divorce, creditors, potentially care fees)
💡Tax savings – Trust assets can provide an efficient home against taxes
💡Avoids probate
Which Trust is right for me?
We always recommend everyone has an up to date Will, and the inclusion of a testamentary Trust is like the foundations for a secure home. Once this is in place Living Trusts are a great next step to take extra measure to protect assets and beneficiaries against (divorce, tax, care and creditors).
Consider these key questions:
1. Age and needs of beneficiaries – income, capital, educational etc
2. What type of assets do you want the Trust to protect?
3. Which kind of Tax protection are you seeking?
4. Level of control and access to Trust assets required?
5. Relationship of beneficiaries to you?
6. Do you want to establish a Trust alone, or with a spouse/civil partner?
Both Trusts are extremely powerful tools for protecting people and assets, especially when used in conjunction with each other.
⚠️We unfortunately see a lot of ‘DIY Trust disasters, and must stress the great importance of seeking proper, professional advice which can take all of your circumstances and requirement (short, medium and long terms needs and wishes) into consideration.
Our experts are here to help. Contact us for a friendly, unbiased, and jargon free chat to help you understand your options and make an informed choice that’s right for you. Call 0345 0175596 or email info@iformlegal.com
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