Many people are wary of trusts. Either they’ve heard horror stories around the use of trusts or are just put off by the legal jargon and complexity that often surrounds them. However, trusts are an important tool in estate planning and are not just for the wealthy.
As a legal practitioner, I remember my first experience of coming across trusts in my working world and equally was a little daunted by the concept, so it is understandable that people with no legal experience feel the same. However, what I have learnt is that trusts are often just misunderstood and with the right advice and guidance, they can be seen and used for the flexible and useful tools that they are, especially in the following circumstances:
How trusts can help protect your assets and family
Proper consideration and use of trusts for tax planning can save tax throughout the generations of a family. This can be via creation of trusts during lifetime and in Wills on death and also for receiving assets from life policy or pension pay-outs.
Protection of assets
Having built up assets throughout life, clients often ask how they can protect assets for their families, even if they were to go into care or if the circumstances of their beneficiaries threaten assets due to a beneficiary potentially divorcing or being made bankrupt. Trusts can protect and ring-fence assets whilst still providing some accessibility to funds if desired.
Where there are beneficiaries who are vulnerable and/or have health or learning difficulties, a trust can make sure that assets are available for those individuals whilst remaining protected within the trust.
Balancing needs and priorities
Sometimes people delay doing a Will because they are unsure how to balance various competing wishes and needs. This can be common in families involving step-child/step-parent relationships where clients want to ensure that their spouse or partner is protected and provided for to an extent, but that assets are ultimately protected for children.
There are a number of different types of trusts and we can advise which trust would be most appropriate to balance each individual’s needs.