With so many different types of Trust available, it can be confusing to know which is the right Trust for you, and why. The benefits of Trusts may be unclear to many, especially now the Government is reviewing the Inheritance Tax structure, but Inheritance Tax mitigation is only one element of what a Trust can do for you.
How can a Trust help you?
Tax planning: this is probably the most well-known benefit. For Inheritance Tax purposes, gifts given to a Trust can reduce the tax to which your Estate could be subject, providing you live for 7 years after making the gift. Trusts can also be used to direct an income to beneficiaries. That income (subject to certain conditions) will then become a part of that individual’s Taxable Estate instead of yours.
Longevity: a Trust can be used to protect the assets of your surviving spouse and/or any children. Trusts can last for up to 125 years, and this is a long time to be certain that your future generations are being looked after. For example, if you want to make sure that in 20 years’ time your grandchildren will have money for a deposit on a house, you can. You can have peace of mind knowing that your legacy is not only being passed down to future generations but that it is also happening at the right time.
Control: as a Settler of a Trust, you can have varying levels of control. If you were to simply gift someone a sum of money, you would have no say over how it was used and when. However, if money is left through a Trust, the trustees can decide how and when the beneficiaries can access it. This allows the benefits to remain in the Trust rather than being absolutely distributed. You could also increase the amount of control over these decisions by also making yourself a Trustee when the trust is initially created.
Protection: this is a major advantage as the assets are protected from third-party claims. For example, if one of the beneficiaries is going through a Divorce or Bankruptcy, it is not possible for anyone to attempt to claim any of the assets held in that Trust. (This is a major advantage if you have any concerns over who your children have tied the knot with.)
Other: often-overlooked benefits of Trusts include increased levels of confidentiality and speed of access to benefits. Upon death, a person’s Will can become accessible to any member of the public who is willing to pay to view it on the online Probate Registry. The contents of a Trust, however, will never be shared with the public. As well as increasing privacy, having assets in a Trust will also reduce the waiting time for beneficiaries to receive their benefits. For example, if your Pension or any other life policy were placed into a Trust, it would not be necessary to wait for Probate to be granted before using those assets to pay any Inheritance Tax liabilities.
Our Advisers are always happy to discuss what type of Trust is best suited to your’s and your family’s needs. I f you would like to know more about the types of Trust we offer and how they can help you, please get in touch.
Redwood Financial is one of the south’s leading Investments, Pensions, Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivalled knowledge of Estate Planning, Lasting Powers of Attorney, Probate, Pensions, Savings & Investments, we can advise on any situation.