10 Reasons Why Everyone Should Consider Setting up A Trust
In order to plan for the future, you should set up a trust to ensure that your estate is given to the people you choose, when you choose.
Setting up a trust can be an effective part of your legacy plan, but it can be a complicated area and you may benefit from taking expert advice.
A trust is a legal arrangement where one or more ‘trustees’ are made legally responsible for holding assets (such as land, money, buildings, shares, etc.).
The assets are placed in trust for the benefit of one or more ‘Beneficiaries’.
The trustees are responsible for managing the trust and carry out the wishes of the person who has put the assets into trust. A trust deed, or some form of documentation, should set out the purposes of the trust and how it is to operate.
So Why Should You Have A Trust?
- Managing assets
If your beneficiaries don’t have the capability or desire to manage the assets you’ll be giving them, having trustees manage those assets can solve the problem. Perhaps your children are too young, or have a disability. You may want to manage the assets while you’re alive, but when you’re gone, a trust can provide proper management if necessary.
- Protecting assets
If you want to protect assets from creditors, marriage breakdown or from those who might influence your beneficiaries, a trust can be an effective vehicle.
- Controlling distributions
If you don’t trust your beneficiaries to directly own the assets you want them to have (perhaps because they are very young), you can distribute assets to them over time through a trust.
- Providing privacy
After your death, your Will is likely to be probated. In this case, your will becomes a public document, along with the value of the assets that formed your estate. Further, certain people may be entitled by law to receive a copy of your will. A trust agreement, however, is a private document and can keep information confidential. Some people replace their wills with a trust.
- Avoiding compulsory succession
If someone feels that they were treated unfairly in your will, a legal battle could ensue. In some cases, it may be possible for your will to be changed. A properly drafted trust can be watertight so that challenges to your wishes may be avoided.
- Saving taxes
When you put money or property in a trust, you don’t own it any longer –so it may not count towards your Inheritance Tax bill when you die. Inheritance tax (IHT) is chargeable at 40% on your estate if it exceeds the IHT nil rate threshold (currently £325,000). This is a complex area where you need advice on your particular circumstances and is subject to the type of trust you hold.
- Avoiding probate
Assets held in a trust fall outside of your estate and, therefore, do not require probate or the payment of probate fees.
- Preserving disability benefits
If a beneficiary is eligible for certain disability payments, it’s possible that those benefits can be eroded under a means test if there are assets in his name or set aside for him. A properly worded trust can be used to hold assets for the beneficiary while still entitling the beneficiary to receive those payments.
- Helping charity
A trust can be set up with the purpose of providing gifts to charity.
- Achieve peace of mind
Apart from all the legal and financial benefits of creating a trust, knowing that your affairs are in order will give you peace of mind. It can be reassuring to know that everything has been arranged and your wishes will be carried out in a way that causes the least stress for your loved ones.
How we can help
At True Bearing Legal Services, we can help you with all your trust needs. We will:
- Review your circumstances with you to see if a trust is suitable to protect your assets
- Help you set up a trust by preparing all the paperwork for you to sign.
- Inform you of your responsibilities and duties in regards to the Trust
- Provide you with in-depth advice throughout the whole process
True Bearing Chartered Financial Planners is a trading name of True Bearing Ltd. True Bearing is an Independent Financial Advisory Firm which is authorised and regulated by the Financial Conduct Authority.
True Bearing Legal Services is a trading name of True Bearing Ltd.
The Financial Conduct Authority do not regulate will writing or legal services advice.
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