Trust Planning Make sure the right things go to the right people at the right time
What is a trust?
A trust is an estate planning tool. It's a way of protecting your assets and preserving your family's inheritance. When you set up a trust, you effectively give away ownership of your assets.
You give property or assets to another person (your trustee) who then manages them for the benefit of another person or group of people (your beneficiaries) - for instance, your children or grandchildren.
Here, you can read about four of the most popular types of trust we help our clients set up. But first, watch the short video below to learn more about what trusts are, how they work, and why they're important.
We create tailor-made trusts to help you:
- Minimise inheritance tax
- Keep your family home in the family
- Put in place a business succession strategy
- Prevent assets from being used to fund long-term care
- Ring-fence your children's or grandchildren's inheritance
- Ensure young children don't inherit before they become adults
- Provide for vulnerable loved ones without affecting their benefits
Protect your children's inheritance
"We are so glad that we have been referred to Amadeus Legal Services for our Will and Trust related services."
Surya Poodipeddi, June 2024
Protective Property Trusts
This is one of the most popular trusts that are used today. It's a good option if you have children from a previous marriage or relationship because it allows you to provide for your new spouse or partner while making sure your children ultimately inherit your share of the property.
It also protects your children's inheritance were your spouse to remarry after your death.
Vulnerable Persons Trust
When you leave an inheritance for your children, you do so because you want to look after them after you're gone. But what if passing on your assets created unintended problems for them? What if your helping hand was more of a hindrance?
This is where a Vulnerable Persons Trust comes in. It allows you to provide for your children in a safe and controlled manner, while minimising the risk that they might be exploited by unscrupulous individuals.
Asset Protection Trust
How do you stop your most important assets from being sold against your wishes? How do you make sure your loved ones actually receive their inheritance?
One way is to use an Asset Protection Trust. This is a form of living trust (as opposed to a will trust) that helps you protect your estate and preserve your children's inheritance. It can give you peace of mind that your assets will be passed on intact to your chosen beneficiaries.
By ring-fencing major assets such as your home, heirlooms, and high-value investments, you can make sure they stay in the family.
What can cause your assets to diminish?
- Care fees If you need care, whether that's because of old age, an accident or mental illness, you will be forced to pay for it if your total assets come to more than £23,250 (the personal savings threshold for care home fees in the UK). Unfortunately, that means you might have to sell your home to cover the fees. And with average annual care costs rising to nearly £50,000, your children's and grandchildren's inheritance could soon disappear before you know it.
- Probate The probate process can be costly and time-consuming. It will apply to any assets you own that are not protected by a trust.
- Remarriage After you die, if your spouse were to remarry, any assets they inherited from your estate could pass to their new husband or wife, rather than your children.
- Family conflict Disgruntled family members, unhappy with how your estate is to be distributed, could try to challenge and upset the terms of your will after you die.
Flexible Lifetime Interest Trust
This type of trust is sometimes referred to as the "ideal modern will". What it does is make sure you provide an income for your spouse after you die while preserving as much of your capital as possible for your children or other chosen beneficiaries.
Your spouse does the same. So if they were to die first, you would have an income from their residual estate.
Case study
We recently helped a couple set up a Vulnerable Persons Trust and put in place a Business Trust for succession planning.
Our clients, Luke and Janany (not their real names), are in their 60s. They have two adult children, one of whom is autistic and unable to handle their personal affairs. Luke has a thriving travel business and, as well as their main residence, the couple have a few rental properties.
When Luke and Janany came to us, they had basic wills in place. These wills provided that when one of them died, everything would go to the surviving spouse and then, on their death, to the child without special needs. We identified a couple of pitfalls with their existing estate planning.
What were the problem areas?
- The business qualified for business relief. But that wasn't protected from inheritance tax for future generations.
- Passing all assets to the child without special needs meant any mishaps in their life - for instance, bankruptcy or divorce - could put their sibling's inheritance at risk. But leaving assets directly to the autistic child would mean they would lose their means-tested benefits.
How our trust planning helped
- The Business Trust ensures that, when the first of our clients dies, the business doesn't form part of the inheritance tax calculations. This means the business relief will be protected if the business is sold or there are changes in the law.
- The Vulnerable Persons Trust ring-fences the autistic child's inheritance. It means they can access their share in a controlled manner without affecting their benefits.
Take the first step to protecting your children's inheritance
Contact us today to book your free hour of advice and find out how we can help you.
We'll listen to your wishes, explore your circumstances, and give you our recommendations. There are no obligations. We'll let you know our fixed fees for carrying out the work we recommend. But you are free to accept or decline.
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