Unlocking the Power of Will Trusts | Curtis Parkinson
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Unlocking the Power of Will Trusts

24 September, 2024 4 minutes reading time


Will Trusts are a step beyond standard Wills, offering unique and often powerful benefits. Trusts can provide enhanced control and protection for your assets, potentially reducing inheritance tax and safeguarding your loved ones’ inheritance. This additional layer of control can give you greater peace of mind and ensures that your wishes are carried out even after you’re gone.

Understanding Trusts

So, what is a trust? At its core, a trust is a legal mechanism where one person (the settlor) entrusts assets to another person or group of people (the trustees) to manage on behalf of someone else (the beneficiary).

What is a Will Trust?

A Will Trust is a special provision within your Will that allows you to specify how certain assets (like money or property) will be managed and distributed to your chosen beneficiaries after you pass away.

Who Should Consider a Will Trust?

If you have a clear idea of who you want to inherit your wealth and are comfortable with assets transferring to beneficiaries immediately upon your passing, a well-drafted Will may suffice. In such a scenario, there would be little need to draw up a Trust. However, Will Trusts can be advantageous in various circumstances:

  1. Where you need to protect young beneficiaries, a Will Trust can maintain responsible management of your children’s inheritance until they reach adulthood.
  1. Suppose you want to safeguard a vulnerable Individual. A Trust can shield the inheritance of beneficiaries with special needs, disabilities, or those susceptible to financial difficulties.
  1. Where you or your partner have a complex family dynamic, blended families, second marriages, or situations involving estranged relatives may benefit from the targeted control that a Will Trust offers.
  1. While Will Trusts don’t eliminate inheritance tax, they can be incorporated into a broader strategy to reduce its impact.
  1. If you have specific wishes for how an asset should be used after your death, a Trust can help ensure those wishes are carried out. For instance, you may want your family business to continue operating under the management of a trusted individual, or you may want your property to be used as a residence for a specific family member.

Considerations When Using Will Trusts

It’s essential to be aware of specific considerations associated with Will Trusts. The role of a trustee is critical, as they are responsible for managing the Trust’s assets and ensuring that the trust is administered following the settlor’s wishes and the law. This role carries significant responsibility, often without any financial compensation.

The laws governing trustees are intricate. Without professional guidance, trustees can inadvertently breach regulations and become personally liable for specific acts of negligence. Administering Will Trusts can be time-consuming, as they have legal and tax implications.

Important Note: Avoiding Care Fees

Be aware that you must refrain from using a Will Trust to avoid paying for care home fees or other necessary support. If a local authority believes you’ve done this, they might assess your fees as if you still had those assets. When an individual intentionally reduces their assets to avoid paying for care, this is known as ‘deprivation of assets.’

Types of Will Trusts

Several types of Will Trusts exist, each designed for a distinct purpose:

  1. Discretionary Trust: Trustees can decide how and when to distribute assets to the beneficiaries.
  1. Interest in Possession Trust: The beneficiary is entitled to the income generated by the trust assets, but the capital remains under the Trustees’ control.
  1. Bare Trust: The beneficiary has an absolute right to the Trust’s income and capital.
  1. Life Interest Trust: The beneficiary receives the income from the Trust during their lifetime, with the capital passing to other beneficiaries upon death. 

Plan Ahead

When creating a Will Trust, it’s essential to plan carefully. Choose trustworthy people to be your Trustees. After all, they’ll be responsible for managing your assets. Will Trusts can be complex. However, expert legal advice ensures it’s set up correctly for your situation. Remember, life changes. Marriage, divorce, the birth of a child, or significant changes in financial circumstances can seriously impact a Will. So review your Will Trust regularly to keep it up-to-date.

Our Advice

A Will Trust gives you control over your legacy, even after you’re gone. You decide how your assets are managed, ensuring your loved ones are protected and your wishes are honoured. From safeguarding your children’s future to minimising inheritance tax, a Will Trust can offer powerful benefits for your estate plan.

Please contact us with any questions about Will Trusts, Wills, or estate planning. We’re here to help.

Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.

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