WHAT IS A TRUST?
Setting up Trusts within a Will can be extremely valuable in Estate Planning for a number of different reasons. Trusts are often the solution to many a complex situation. The use of a Trust protects your assets and controls the distribution of your estate. Trusts are essential and Parks Wills & Estate planning can provide a variety of different Trust solutions depending upon your objectives.
TYPES OF TRUSTS
Despite changes in legislation and the transferable Nil Rate Band which was introduced in October 2007, there are still some valuable reasons for establishing Discretionary Trusts in your Will with Inheritance Tax benefits. Having certain assets “ring fenced” in a Trust can ensure that your children and their children’s futures will be safe guarded. Discretionary trusts are sometimes set up to put capital aside for:
• A future need that as yet may not be known, for example, a grandchild that may require more financial assistance than other beneficiaries at some point in their life.
• Beneficiaries who are perhaps not capable or responsible enough to deal with money matters by themselves.
Discretionary trusts for vulnerable beneficiaries
A discretionary trust may be used to help a ‘vulnerable beneficiary’. A vulnerable beneficiary is someone who is:
• Mentally or physically disabled.
• A child below the age of 18 who has lost a parent through death.
• A trust set up for the benefit of a vulnerable beneficiary may qualify for special tax treatment.
Protected Property trusts
Some of the more common Trusts found in modern Wills are used for protecting your property in a second or third marriage, after the first spouse/partners death. You may wish to leave your property to the children who are from a previous marriage by using a Trust, this could allow you to provide a home for your spouse/partner for the rest of their life and your children inherit ultimately when the current spouse dies.