Legal Will Writers of Aberdeen, Inverness & Moray

What is a Trust?

Under UK law a Trust can be defined as a legal arrangement that allows someone to give away their assets such as money, shares and property in a controlled and tax efficient way for the benefit of individuals who are nominated in the Trust. Trusts can be created during lifetime and also by Will to come into effect on death.

You may settle property upon trust to determine precisely the extent to which your chosen beneficiaries are to enjoy the settled property in the future.

Where you do not wish to determine in advance the precise extent of each benificiary's entitlement, you may nominate a category of beneficiaries and give trustees the power to determine how

Why Set Up a Trust?

The main reasons for setting up a Trust are:

  • To assist in tax planning and minimise your potential Inheritance tax liabilities
  • To protect assets eg protect part or all of you home against future claims.
  • To provide for a disabled or child beneficiary
  • To make prudent provision for your loved ones in case of unforeseen circumstances
  • To make a gift with conditions based on your wishesmuch (if anything) each potential beneficiary should receive

Types of Will Trusts

 Property Protection Trusts

Asset Protection Trusts

Family Protection Trusts

The above Protection Trusts are suitable for married, unmarried and same sex couples who own their own home in the following circumstances:

  • Couple who are concerned about unwanted potential claims on their estate
  • Couples who have children from previous relationships
  • Couples who individually want their children to inherit without forcing their partner to sell their home
  • Couples where one partner is significantly older than the other.
  • Avoids sideways disinheritance
  • Executry costs can be avoided
  • Beneficiaries inherit when it suits them
  • Avoid passing on inheritance tax problems to your beneficiaries

 

 

Typical IHT Trusts:

Inheritance Tx (IHT) is a tax on the value of assets at death and on certain lifetime gifts. It is at present charged at a rate of 40% above the individuals IHT Nil Rate band currently   £325,000 in 2012-13

So IHT is not just the concern of the wealthy, many people will now be at risk from IHT because so many of us are worth more indeath athn when alive. Take into consideration Life Assurance, PEPs/TESSAs/ISAs/Death in Service Pensions,Shares/Unit Trusts/Bonds,Business Assets,Savings and rising property prices.

Together with best use of personal exemptions the use of trusts can be a very important way of mitigating your potential liability to Inheritance Tax. A lack of prudent planning now could make the government your biggest beneficiary!

  • Simple 2 year Discretionary Trust in favour of spouse and children
  • Full (80 yr) Discretionary Trust in favour of spouse, issue and remoter issue
  • Promissory Not (IOU) Loan Trust with 80 yr Discretionary Trust in favour of spouse and issue, includes change to ownership in common and life interest in family home
  • Residue (Free) in 2 yr Discretionary Trust for spouse to make decision over distribution