A trust is a legal arrangement where assets are held and managed by one or more individuals (trustees) for the benefit of another person or group of people (beneficiaries). Trusts can be created for a variety of purposes, including providing for children, protecting vulnerable individuals, and supporting charitable causes.
When creating a will, it is important to carefully consider whether to include any trusts and, if so, how to structure them effectively. This article provides a checklist to help you understand the key considerations when including trusts in your will.
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For a free initial discussion on how we can help you deal with the legal implications of creating a Trust, get in touch with us today. We are also experienced in dealing with all aspects of Wills and Probate and we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.
- Do You Need a Trust?
- Protecting Vulnerable Beneficiaries:
– If you have a child or other beneficiary who may not be able to manage their own finances responsibly (e.g., due to age, disability, or potential for undue influence), a trust can provide a valuable layer of protection.
– The trust can ensure that their assets are managed wisely and used for their benefit.
- Providing for Children:
– If your children are young or you have concerns about their maturity, a trust can ensure that their inheritance is managed responsibly and used for their education, housing, or other important needs.
– You can specify when and how they receive access to their inheritance, such as at specific ages or upon reaching certain milestones.
- Supporting Charitable Causes:
– You can establish a charitable trust in your will to support a particular cause or organisation.
– This can be a powerful way to make a lasting impact on the world.
- Minimising Inheritance Tax:
– In some cases, trusts can be used to reduce inheritance tax liabilities.
– However, tax laws are complex and you should always seek professional tax advice before relying on trusts for tax planning purposes.
- Types of Trusts
- Discretionary Trusts:
– Trustees have wide discretion in how they distribute income and capital to the beneficiaries.
– This provides flexibility and allows the trustees to respond to the changing needs of the beneficiaries.
- Accumulation and Maintenance Trusts:
– Trustees can accumulate income and invest it for the benefit of the beneficiaries, rather than distributing it immediately.
– This can be beneficial for young children or beneficiaries with special needs.
- Bare Trusts:
– The beneficiaries are legally entitled to their share of the trust assets as soon as they reach the age of majority (18).
– This type of trust is generally simpler to administer but offers less flexibility.
- Testamentary Trusts:
– These trusts are created through a will and come into effect upon the death of the testator (the person making the will).
- Key Considerations When Creating a Trust
- Choice of Trustees:
– Select individuals who are trustworthy, responsible, and have the necessary skills and experience to manage the trust effectively.
– Consider appointing professional trustees, such as a solicitor or a trust corporation.
- Definition of Beneficiaries:
– Clearly define who the beneficiaries of the trust are and their respective interests.
– Consider including provisions for future generations of beneficiaries.
- Trust Purpose:
– Clearly state the purpose of the trust and how the trust assets are to be used.
– This will guide the trustees in their decision-making.
- Distribution Rules:
– Specify how the trust income and capital are to be distributed to the beneficiaries.
– Consider factors such as age, needs, and circumstances.
- Duration of the Trust:
– Determine the duration of the trust.
– Trusts can be created for a fixed period or for the lifetime of the beneficiaries.
- Trust Administration:
– Consider how the trust will be administered, including the appointment of a professional trustee or the use of a trust company.
- Tax Implications:
– Seek professional tax advice to understand the potential tax implications of creating and administering a trust.
- Drafting the Trust Provisions
- Clear and Concise Language:
– The trust provisions in your will should be clearly and concisely drafted to avoid ambiguity and potential disputes.
- Professional Legal Advice:
– It is essential to seek professional legal advice from a specialist wills and estates lawyer when drafting trust provisions.
– A solicitor can ensure that the trust is legally valid and effectively meets your objectives.
- Reviewing and Updating the Trust
- Regular Reviews:
– It is important to review the trust provisions in your will periodically to ensure that they remain appropriate and effective.
– This is particularly important if there are significant changes in your family circumstances or financial situation.
- Updating Your Will:
– If you make any changes to the trust provisions, you should update your will accordingly.
– This will ensure that your will accurately reflects your wishes.
How we can help
We have a proven track-record of helping clients create Trusts. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Wills and Probate Solicitors
It is important for you to be well informed about the issues and possible implications of creating a Trust. However, expert legal support is crucial in terms of ensuring your wishes are met as you would want them to be.
To speak to our Wills and Probate 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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