It’s a common problem: you hear about trusts all the time but in truth you don’t really know how they work. Without expert advice, how can you be sure a trust would benefit you and your family? And which type of trust should you choose?
We’re here to help.
As the person putting the assets (such as property or money) into the trust, you are the ‘settlor’.
There are many different types of trust and finding the right solution for your specific needs and circumstances is critical. Each type of trust is taxed differently, which might also influence your thinking.
Are you worried your local authority might have the right to sell your house to pay the costs of your future nursing home care? Or are you concerned that if your husband remarries after your death, he will leave your share of the family home to his new wife and not to your children? If these kinds of issues are weighing on the minds of you and your spouse, you should consider including protective property trusts in your wills.
If, however, your concern is to support a vulnerable person (such as a disabled child), you might want to investigate discretionary trusts. Firstly, you’ll need to know a ‘trustee’ is someone you, as the settlor, name to manage the assets held in the trust for the good of one or more beneficiaries. In a discretionary trust, the trustees can make decisions on how to use the income from, and sometimes the capital in, the trust. (As settlor, you can also be a trustee.) Trustees might therefore decide which of multiple beneficiaries should receive a particular payment, how often payments are made or whether any conditions should be imposed on the beneficiaries. If, for example, you have a grandchild likely to need greater financial support through his or her life than your other grandchildren (who can also be beneficiaries), you might want to consider setting up a discretionary trust.
What if you simply want to pass assets to someone currently too young to handle their financial affairs? A bare trust might be the perfect solution for you. In this instance, the beneficiary has the right to all the capital and income (such as interest earned on money) at any time as long as they are 18 or older. Until the beneficiary reaches that age, trustees manage the assets in a bare trust.
Protective property trusts, discretionary trusts and bare trusts are just three of many options available to you. You can even establish a mixed trust, in which different types of trust are combined, with each part of the trust addressed according to the tax rules that apply to that specific part. Setting up the right trust for your situation is often a very complex matter and you should never proceed without expert legal guidance. Why not call us now, at Deborah Wilkinson & Co. , for more advice?