Setting up Trusts within a Will can be extremely valuable in Estate Planning for a number of different reasons.
When it comes to protecting assets and controlling the distribution of your Estate, Trusts are essential and Newleaf advisers can provide a variety of different solutions depending upon your objectives.
Despite changes in legislation there are still some valuable reasons for establishing Trusts in your Will and there are still Inheritance Tax benefits. Having certain assets "ring fenced" in a Trust can ensure that your children are not settlements.
Should a surviving partner become infirm and need to go into long term care, funds in a Trust would not feature in terms of Local Authority means testing. (subject to certain criteria)
Often the solution to many a complex situation can be with the use of a Trust, which can be created as a stand alone document that is set up whilst still alive and comes into force immediately, or if written into your Will, is effected upon your death.
Some of the more common Trusts found in modern Wills are used for protecting your property after your death. You may wish to leave your property to your children but by using a Trust this will allow you to provide for your spouse or partner for the rest of their life.
Avoiding inheritance taxes legally can be a minefield but the one guaranteed route, wholly endorsed by the Inland Revenue, is by way of a Discretionary Will Trust either set up in your lifetime or within your Will to be effected on the first death of a couple.
Trusts for Disabled
If there is someone in your family with a learning disability, you may be concerned about how they will cope in the future when you're no longer there to care for them. But how do you provide financially for someone who may find it difficult to manage his or her own affairs?
And how do you leave money to secure the future of a loved one without reducing their entitlement to DSS benefits or local authority funding of residential care?
Discretionary trusts are set up by parents (or other relatives) as a way of making long term financial provision for a disabled child. The reason a trust is useful is that assets once put in trust do not belong to either the donor, 'settlor' in legal jargon (parents) or the 'object' of the trust (disabled son or daughter) who is intended to benefit. This means that the capital held in the trust is not taken into account when assessing entitlement to state benefits like Income Support or local authority obligations to fund care.
If parents leave a Will which says words like 'our son hereby inherits our worldly goods' and the goods amount to more than about £3,000 the effect will be to immediately take their son or daughter out of some Social Security means tested benefits. Local Authority (Social Services) support may also cease until the value of the inheritance falls below a threshold level. In addition if the disabled son or daughter is unable to manage money then the Court of Protection can get involved. They will appoint a person called a 'receiver' to look after the money and other assets. The receiver may not be the person the disabled person or parents would choose.
Trusts are used to pay for extra things which Social Security benefits may not fund, a holiday, new clothes, electrical goods, special equipment. Importantly a trust can also hold, manage and maintain the parental home if put into the trust.
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