How a Trust can Work for You

Each family has their own unique structure and way of working. In order to address a family’s unique concerns regarding writing a Will, it’s important to give your Will writer specific details on how the estate and finances may be managed after your death. This is where a trust in place within the Will is essential.

A trust is a legal arrangement where you can entrust money, investments, and properties to a guardian (the trustee) on behalf of a third party. For instance, you may choose a close friend to manage your life savings on behalf of your children who are still minors and not old enough to comprehend or be entrusted with money.

Again, just like setting up a power of attorney, a trustee must be someone that you are comfortable leaving your assets with, as, once you have entrusted the money to them, it will legally be considered theirs. If you trust this person completely, it will be beneficial from a tax perspective for your beneficiaries, because it will no longer be subject to inheritance tax, though funds can be gifted to your beneficiaries (in this case your children) after your death and when they come of age with no tax implications.

You must also consider the fact that the trustee now controls the assets you have placed in their name, meaning you cannot change the beneficiary on your Will after you have entrusted it to them, as they are no longer your funds to leave behind.

When you create a trustee as part of your Will, you are allowed to impose certain rules on the trust assets or wealth. For example, you may set the rule that the money must remain untouched until your child reaches the age of 18 and can now benefit from the money, or you may wish to state exactly what that money is to be used for in the future. For example, you’re your child’s education or housing deposits.

How can a trust function?

A trust can provide for your partner in your absence and ensure a secure future for your children.

• It can provide for specific vulnerable family members or friends who may be unable to support themselves financially.
• A trust can protect the inheritance of family members in the event of a divorce, or bankruptcy.
• It can help minimise any inheritance tax in the future as assets are no longer in your name.
• And it can protect your assets from liabilities such as care home fees, should you require care later in life.

Including a trust in your Will may require support from a financial advisor or solicitor to determine how much you can safely entrust. You may create more than one trustee on your Will to ensure that wealth is distributed evenly.