Divorce can have significant financial implications, particularly when it comes to the division of assets. At Blackstone Solicitors, we understand the importance of safeguarding your estate from the potential risks associated with divorce. One effective strategy to achieve this is by using trusts in wills. This article aims to explain how trusts in wills can help protect your estate from divorce and provide peace of mind.
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Understanding Trusts in Wills
A trust is a legal arrangement where one or more trustees are appointed to manage assets on behalf of beneficiaries. When a trust is included in a will, it is known as a testamentary trust. This type of trust only comes into effect upon your death and can be a powerful tool for managing and protecting your estate.
How Trusts in Wills Protect Your Estate from Divorce
- Separation of Legal Ownership
One of the primary ways trusts protect your estate from divorce is by separating the legal ownership of the assets from the beneficiaries. When assets are placed into a trust, they are legally owned by the trustees, not the beneficiaries. This means that the assets are generally not considered part of the beneficiaries’ personal estate and are therefore protected from being divided in a divorce settlement.
- Trustees’ Role: The trustees manage the trust assets according to the terms of the trust deed, ensuring that the assets are used for the benefit of the beneficiaries.
- Beneficiaries’ Rights: Beneficiaries have the right to benefit from the trust assets, such as receiving income or using trust property, but they do not have direct ownership of the assets.
- Discretionary Trusts
Discretionary trusts are particularly effective in protecting assets from divorce. In a discretionary trust, the trustees have the discretion to decide how and when to distribute the trust assets to the beneficiaries. This flexibility means that beneficiaries do not have an absolute right to the trust assets, making it more difficult for these assets to be considered in a divorce settlement.
- Trustees’ Discretion: Trustees can choose to withhold distributions if a beneficiary is going through a divorce or if there is a risk that the assets could be claimed in a divorce settlement.
- Beneficiaries’ Protection: Since beneficiaries do not have a guaranteed right to the trust assets, these assets are less likely to be included in the financial settlement of a divorce.
- Life Interest Trusts
Life interest trusts, also known as interest in possession trusts, provide a named beneficiary (the life tenant) with the right to receive income from the trust assets or to use the trust property during their lifetime. Upon the death of the life tenant, the trust assets pass to the remaindermen, who are the ultimate beneficiaries. This structure can offer protection from divorce in several ways:
- Income Protection: The life tenant’s right to income from the trust can be protected from being considered in a divorce settlement, as the capital of the trust remains intact and is not part of the life tenant’s personal estate.
- Capital Preservation: The trust capital is preserved for the remaindermen, ensuring that it is protected from the life tenant’s divorce proceedings.
Setting Up a Trust in Your Will
Setting up a trust in your will involves several steps, and it is advisable to seek professional legal advice to ensure that the trust is structured correctly. Here are the key steps involved:
- Consultation with a Solicitor: The first step is to consult with a solicitor who specialises in estate planning and trusts. At Blackstone Solicitors, we can help you understand the legal implications and benefits of setting up a trust in your will.
- Drafting the Will: Your will must clearly outline the terms of the trust, including the appointment of trustees, the identification of beneficiaries, and the specific terms and conditions of the trust.
- Choosing Trustees: Trustees are responsible for managing the trust assets and ensuring that the terms of the trust are followed. It is important to choose trustees who are trustworthy and capable of managing the trust effectively.
- Funding the Trust: You will need to specify which assets are to be placed into the trust. This may include property, investments, or other valuable assets.
Additional Considerations
While trusts in wills can provide significant protection from divorce, there are additional considerations to keep in mind:
- Timing: It is important to set up the trust well in advance of any potential divorce proceedings. If a trust is established with the intention of defrauding a spouse, it may be challenged and set aside by the courts.
- Professional Advice: Seek professional advice to ensure that the trust is structured correctly and complies with all legal requirements. At Blackstone Solicitors, we can provide expert guidance to help you create a robust estate plan.
- Regular Reviews: Regularly review your estate plan to ensure that it remains up-to-date and reflects your current wishes and circumstances. Changes in your financial situation or family dynamics may necessitate adjustments to your trust arrangements.
Conclusion
Including a trust in your will can provide significant protection for your estate from divorce, ensuring that your assets are preserved for your beneficiaries. By separating the legal ownership of the assets from the beneficiaries, using discretionary trusts, and setting up life interest trusts, you can safeguard your estate from potential claims in divorce proceedings.
At Blackstone Solicitors, we specialise in providing tailored estate planning services, including the creation of trusts in wills, to help you protect your estate and ensure that your wishes are honoured. If you are considering setting up a trust in your will, we encourage you to contact us for a consultation. Our team of experienced solicitors can guide you through the process and ensure that your estate plan is structured to meet your specific needs.
We have a proven track-record of advising upon all aspects of private client work. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.to incorporate, what kind of ownership
How to Contact Our Private Client Solicitors
It is important for you to be well informed about the issues and possible implications of setting up a Trust. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Trust solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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