For many people, ensuring that their loved ones are financially secure after they are gone is a top priority. Writing a will is an essential step in this process, but for those who wish to provide additional protection and control over how their assets are managed and distributed, including a trust in the will can be a powerful solution.
At Blackstone Solicitors, we often advise clients across England and Wales on how to use trusts in wills to safeguard their family’s inheritance. This article will explore what trusts are, how they work in wills, and the benefits they offer for protecting your loved ones’ financial future.
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What Is a Trust?
A trust is a legal arrangement where one or more individuals, known as trustees, hold and manage assets on behalf of others, known as beneficiaries. The terms of the trust dictate how and when the assets can be distributed to the beneficiaries.
When included in a will, the trust is created upon the death of the individual who made the will (the testator). This is known as a “will trust” or “testamentary trust.”
Why Use a Trust in a Will?
Trusts in wills provide a higher level of flexibility and control over how your assets are handled compared to a straightforward will. This can be particularly important in situations where:
- You want to protect your beneficiaries’ inheritance from risks such as divorce, bankruptcy, or poor financial decisions.
- You wish to provide for vulnerable or young beneficiaries who may not yet be able to manage an inheritance responsibly.
- You want to ensure assets are preserved for future generations.
- You have a blended family and wish to balance the interests of a current spouse or partner with those of children from a previous relationship.
Types of Trusts Commonly Used in Wills
There are several types of trusts that can be included in a will, each tailored to specific circumstances.
- Discretionary Trust
A discretionary trust gives trustees the authority to decide how, when, and to whom the assets are distributed. This type of trust is particularly useful when the beneficiaries’ circumstances may change over time, as it allows the trustees to adapt their decisions accordingly.
- Life Interest Trust
This trust allows a named individual (often a spouse or partner) to benefit from an asset, such as living in a property or receiving income from investments, for the remainder of their life. After their death, the asset passes to other beneficiaries, such as children or grandchildren.
- Bare Trust
A bare trust, also known as a simple trust, is one where the beneficiaries and their entitlement to the trust assets are fixed from the outset. This type of trust is often used for younger beneficiaries, as the assets are held by trustees until the beneficiaries reach a specified age, such as 18 or 21.
- Protective Trust
A protective trust is designed to safeguard an inheritance from being squandered or lost due to the beneficiary’s financial difficulties, such as bankruptcy or a divorce settlement.
- Trusts for Vulnerable Beneficiaries
These trusts are specifically designed to provide for beneficiaries with disabilities or other vulnerabilities. They allow the beneficiary to receive financial support without jeopardising their eligibility for means-tested benefits.
Benefits of Using Trusts in Wills
Including a trust in your will can offer a range of benefits for you and your loved ones:
- Protecting Assets from Risks
Trusts can shield your assets from potential risks, such as creditors, legal disputes, or financial mismanagement by beneficiaries.
- Providing for Specific Needs
Trusts allow you to tailor how your estate is distributed to meet the specific needs of your beneficiaries, ensuring they are supported in the most appropriate way.
- Preserving Assets for Future Generations
For those wishing to preserve wealth within the family, trusts can ensure that assets are passed down to future generations rather than being depleted or redirected.
- Tax Efficiency
In some cases, trusts can help minimise Inheritance Tax (IHT) liabilities, particularly if assets are managed carefully within the trust. However, it’s essential to seek expert advice, as the tax rules governing trusts are complex.
- Ensuring Continuity in Blended Families
Trusts can provide for a surviving spouse or partner while safeguarding assets for children from previous relationships, helping to balance competing interests in blended families.
Setting Up a Trust in Your Will
- Identify Your Objectives
The first step is to determine what you want to achieve by including a trust in your will. Are you looking to protect assets, provide for vulnerable beneficiaries, or manage inheritance tax? Your goals will influence the type of trust that is most suitable.
- Choose Your Trustees
Trustees play a crucial role in managing the trust, so it’s important to choose individuals who are trustworthy, capable, and willing to take on this responsibility. Trustees can be family members, friends, professionals (such as solicitors), or a combination of these.
- Draft the Trust Terms
The terms of the trust should clearly outline how the assets will be managed and distributed. This includes specifying the beneficiaries, the trustees’ powers, and any conditions or restrictions on how the assets can be used.
- Seek Professional Advice
Given the legal and financial complexities of setting up a trust, it’s essential to work with a solicitor experienced in wills and trusts. They can ensure that the trust is structured correctly and complies with all relevant laws.
Common Concerns About Trusts in Wills
- Are Trusts Expensive to Set Up and Maintain?
While there are costs associated with establishing and managing a trust, these are often outweighed by the benefits of protecting and preserving your family’s inheritance. Professional trustees or advisors may charge fees, but they can also provide valuable expertise in managing the trust effectively.
- Will the Trustees Have Too Much Power?
Trustees are legally obligated to act in the best interests of the beneficiaries. You can also include specific instructions in the trust terms to guide their decisions and ensure your wishes are followed.
- Are Trusts Complicated for Beneficiaries?
Trusts are designed to simplify the management of assets for beneficiaries. Trustees handle the administration and distribution of the assets, ensuring beneficiaries can access the support they need without having to navigate complex legal processes themselves.
How Blackstone Solicitors Can Help
At Blackstone Solicitors, we have extensive experience helping clients across England and Wales create tailored wills and trusts to protect their families’ inheritances. Our team can guide you through every step of the process, from understanding your options to drafting a comprehensive will that reflects your wishes.
We can also assist with:
- Appointing trustees and advising them on their responsibilities.
- Resolving disputes involving trusts or wills.
Our goal is to provide clear, practical advice to help you safeguard your family’s future.
Conclusion
Including a trust in your will is a proactive way to protect your family’s inheritance and ensure your assets are managed in line with your wishes. By offering flexibility, security, and tax efficiency, trusts can provide peace of mind that your loved ones will be supported after your passing.
At Blackstone Solicitors, we are here to help you navigate this process and create a will that truly reflects your goals. Contact us today to learn more about how trusts in wills can benefit you and your family.
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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