There are many different kinds of Will Trusts that provide various solutions to common problems – they should not be considered as a “one size fits all solution”. We have outlined some of the more regularly used Will trusts below.
Life Interest Trusts
Life Interest Trusts are a very effective way of ensuring that should one half of a couple die and the surviving spouse go on to remarry that the deceased’s family inherit the family home, or at least half of it in the long run, sometimes referred to as a ‘Bloodline Will’. A Life Interest Trust can also be utilised to ensure that should the surviving spouse go onto need care that only half of the property can be assessed to fund this. This is a positive solution as it means that the surviving spouse can afford quality care, but the family will still inherit at least half of the property..
Vulnerable Person Trusts
Disabled and Vulnerable Persons Trusts have more favourable Tax implications compared to their Discretionary cousins. If during the lifetime of the disabled person the income and capital will be used only for their benefit, the Trust will not incur any charges for Inheritance Tax and the ten yearly Inheritance Tax charges that are incurred by Discretionary Trusts will not apply..
Discretionary Trusts are used for a variety of reasons. They are often accompanied by an expression of wishes that guides the trustees on how the testator would like the assets to be used. Sometimes Discretionary Trusts are put in place to look after funds until the beneficiaries reach a certain age or to cover certain costs such as education or funding a house purchase. They can be used to account for the life style choices of the beneficiaries, who the testator may believe are not responsible or capable enough to manage the assets themselves..
Tax and Trusts
Different Trusts have different tax implications which will vary based of the size of the testator’s estate and on who will be inheriting. The individual tax implications should be discussed, taking into account the individual testator’s circumstances and wishes before decided on the inclusion of a Will Trust. Trying to avoid tax is normally a pointless task and can be a punishable offence, however careful tax planning that is tailored to the individual by a professional advisor is imperative to ensure that your estate is utilised in the most effective way.
Please note** The information provided on this web page is to give an overview of the type of Will Trusts and under no circumstances should be considered as advice. Any figures given were correct at the time of writing.
We also offer Lifetime Trusts but only in the right circumstances- these Trusts are often mis-used and mis-sold and come under many different guises such as ‘Probate Trusts’ or ‘Probate Property Trusts’- there are a strict set of criteria that you must meet for Life Time Trusts to be effective and to not cause any long term tax problems or to be considered deliberate depravation- you can read more about the pitfalls of these in Emma’s blog here
Trustees responsibilities can be found here