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Is a Will Trust Right for You?
10 December, 2024 5 minutes reading time
Protecting Your Family and Legacy
Planning for the future can be daunting, especially concerning your loved ones. How can you ensure they are provided for after you’re gone? Establishing a Will trust is becoming increasingly popular, but is it the right choice for you?
What is a Will Trust?
A Will trust functions as a set of specific instructions within your Will. It allows you to designate particular assets, such as your family home, and outline precisely how you want your trustees to manage and distribute them after your death.
Benefits of a Will Trust
1. Safeguard Your Legacy
A Will trust ensures that your trustees manage your assets according to your wishes, even if your surviving partner remarries or faces financial difficulties. For example, if you have young children, a Will trust can protect their inheritance should your partner’s circumstances change.
2. Inheritance Tax Planning
Inheritance tax can significantly diminish your family’s inheritance. For instance, a couple with a valuable estate can use a Will trust to ensure that their share of the assets passes into the trust when the first partner dies. This can utilise both partners’ inheritance tax allowances, reducing the overall tax burden on the estate and potentially saving significant amounts for beneficiaries.
3. Protect Vulnerable Beneficiaries
If you have young children or beneficiaries with disabilities, a Will trust allows you to safeguard their inheritance. Parents of a child with special needs, for instance, could set up a trust to manage their child’s inheritance, ensuring access to necessary funds for care and well-being throughout their life while preventing exploitation or poor financial decisions.
4. Speed-Up Probate
Probate can be lengthy and stressful for grieving families. Suppose a couple’s main asset is their home, held within a Will trust. In that case, the surviving partner may, depending on the circumstances, avoid the delays and costs associated with probate, allowing them to remain on the property without disruption. This is especially important when dealing with complex estates or when beneficiaries require immediate access to funds.
Potential Drawbacks
1. Complexity
Establishing and managing a trust can be complex and requires professional guidance. The trust must be correctly drafted within the will, and it’s essential to understand the legal and administrative implications. Mistakes in drafting or managing the trust can lead to unintended consequences.
2. Potential for Disputes
Mistakes and ambiguity can cause issues. Clear communication and careful planning are crucial. Misunderstandings or disagreements among trustees or beneficiaries can lead to complications and potentially costly legal battles. This is where specialist legal and financial advice is essential.
3. Cost
Establishing and managing a trust involves legal fees. It’s essential to weigh these costs against the potential benefits to determine if a trust is right for you.
Trusts involving Property
It’s important to note that the specifics of your situation matter significantly. Whether probate is required depends on how you own your property and the wording of your Will trust.
Joint Tenancy
If you own your property as joint tenants, the surviving partner automatically inherits the entire property due to the right of survivorship. Probate may not be necessary for the property itself, but it might be required for other assets in the deceased’s estate. For example, if a couple owns their home as joint tenants and one partner dies, the surviving partner automatically becomes the sole owner. However, if the deceased partner also had significant savings in their name alone, probate would be needed to deal with those assets.
The Land Registry should also be updated to reflect the names of the trustees and the surviving co-owner on the title. Ultimately, this will simplify the process when the life tenant passes away, allowing the trustees to control those assets without relying on another grant of probate.
Tenants in Common
If you own your property as tenants in common, each of you owns a defined share. When the first ‘tenant’ dies, the Will trust holds the deceased’s share. Here, probate is usually required to deal with the deceased’s share of the property. For instance, if a couple owns their home as tenants in common and one partner dies, their share will pass into the Will trust. The trustees must go through probate to formally transfer that share to the trust, even though the surviving partner may continue to live in the property.
Key Questions to Consider
What are your long-term goals? What do you hope to achieve with a Will trust?
How is your property owned? Is it joint tenancy or tenants in common?
Who will be your trustees? Choose reliable individuals or professionals.
What are the trust’s terms? Understand the conditions for distributing assets and terminating the trust.
Our Advice
Deciding whether a Will trust is right for you is a significant step. Our expert Wills, Trusts, and Probate team can guide you through the process, ensuring your wishes are protected and your loved ones are cared for. Contact us to learn more. 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.