A property protection trust’s purpose is to facilitate the orderly distribution of one’s possessions after death. You establish a trust to keep your assets safe during your lifetime, and once you pass away, the trust’s assets go straight to the people you designated. Property protection trusts are a sort of life interest trust. However, since the trust is designated in the will, they overlap with trust wills. It should be noted that there is no legal concept of a property protection trust. The mechanism is a regular trust with a life interest for a beneficiary. The term is often encountered when discussing trusts.
In this article, Property Protection Trust Disadvantages, we take a look at these issues in more depth.
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For a free initial discussion with a member of our New Enquiries Team, get in touch with us today. We are experienced in dealing with all the legal aspects of Property Protection Trusts and once instructed, 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 are on the best possible footing from the start and also 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.
What are the disadvantages of a property protection trust?
The primary disadvantages of trusts are their perceived irrevocability, the loss of authority over the assets placed in trust, and their fees.
Trusts can be made revocable, although this typically has negative tax, estate duty, asset protection, and stamp duty implications. The issue of revocability must be examined when analysing the provisions of the trust.
Many potential settlors are hesitant to transfer assets to trustees for fear of ceding power. Those who seek to continue to exercise effective control over the trust assets after the transfer must engage in meticulous preparation and have a grasp of the fundamental legal criteria of a trust if the trust is to remain valid or useful for its intended purpose.
If a settlor retains too much control, there is a chance that the trust will fail and the settlor will continue to be considered the legal owner. If this occurs, all of the benefits of holding the assets in trust may be lost. To provide comfort to a settlor, varying degrees of control and information rights can be retained.
Establishing a trust for property protection may incur large legal fees due to its complexity. Prior to initiating work for a customer, we will always endeavour to provide a comprehensive pricing estimate. Moreover, you may incur continuous administrative costs to guarantee legal compliance. This makes them a costly option for individuals with limited funds.
A trust for property protection might limit access to and utilisation of the assets it holds. In the event of a financial emergency, you may not have access to liquid cash without the trustee’s permission.
In certain legal contexts, assets put in a trust may still be subject to claims from creditors. It is crucial to employ an experienced solicitor who can ensure that all legal criteria are completed and detect any potential flaws that could jeopardise the security of the trust.
What are the benefits of a property protection trust?
If you or your company are the target of legal action from creditors, a property protection trust can shield your assets from their seizure. This is especially helpful when dealing with money issues, as it safeguards vital assets both individually and corporately during insolvency proceedings.
The probate process is simplified and inheritance taxes are reduced when assets are transferred to a property protection trust. To safeguard family finances, safeguard important property holdings, or manage the inheritance of a deceased family member, this is an invaluable tool.
Another perk of property trusts is their adaptability in terms of both asset management and distribution. The trustees have complete discretion over the distribution of trust assets, including the ability to add or remove beneficiaries at any time.
How we can help
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 Property Protection 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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