The Benefits of Trusts in Estate Planning

Estate Planning needs careful consideration, and many times Trusts within Wills are overlooked, either because people are scared of them or the person writing the Will is unaware of the benefits of Trusts.  Below we will detail the main types of Trusts to be considered when estate planning.

1. Property Trust

For many couples their home is their most valuable asset.  We all scrimp and save to be able to make those mortgage payments each month and when the home is finally ours, many want to pass it on to their families so to give them a better start or help in life.

If you own your property jointly, a Property Trust can help to ensure that this valuable asset passes on to your family and that third party factors such as remarriages, care home fees and changing of Wills does not affect your wish to pass on your share of the home to your family.

2. Life Interest Trust

Like with a Property Trust, you may have substantial cash assets of more than £23,250 and you want your spouse or partner to benefit from this cash if they need it, but you suspect that they will not need it.  Rather than losing it to potential care fees and third-party influences, you can protect it in a Life Interest Trust so that your spouse/partner can benefit from it, but if they do not use it during their lifetime it will pass to your family as you state.

Again, this means that your wishes are carried out and it cannot be affected by your spouse/partner remarrying, care home fees or changing their Will.

3. Disabled Persons Trust

If you have someone who is disabled (receiving benefits) or suffering from a mental disorder, you do not have to exclude them from benefit from your Will.  Many people choose to exclude them as an inheritance can affect their entitlement to means tested benefits.

A Disabled Persons Trust allows the person to benefit from an inheritance without it affecting their means tested benefits.  These trusts have to be set up in a Will and cannot be set up after a death.

4. Bare Trust

These types of Trusts are common when you are providing for young people, which enables the Trustees to manage the monies until the young person attains a certain age, such as 18 years, 21 years or 25 years of age.

5. Discretionary Trust

A discretionary trust can be very useful when you want to retain some control over your assets and how they are used.  These Trusts allow the Trustees to use their absolute discretion as to how, when and who receives distributions from a Trust.  It allows you to provide guidance, in what is referred to as a Letter of Wishes, so your Trustees can know what your intentions were and what goals need to be reached to make a distribution and to whom.

Contact us to discuss whether a Trust in your Will is appropriate for you.

Ginette McCaffery – Wills, Probate & Trusts Solicitor

Dated:  08.09.2023