We are often asked by clients whether or not they should include a trust within their wills
All wills, in fact, already contain a basic trust by the appointment of executors.
Part of an executor’s responsibility is to hold a deceased person’s assets on trust to pay liabilities and if applicable, inheritance tax before distributing to beneficiaries. In some circumstances it is appropriate for a more complex type of test to be included in a will. We understand that trusts can seem overly complicated or daunting, however in simple terms a trust is made up of the following:
- the trust fund – property or cash
- trustees who manage the trust fund – these can be your executors or another person of your choosing
- the beneficiary or beneficiaries who you wish to benefit from the trust fund.
A discretionary trust or life interest trust are the two main types of will trust. A discretionary trust allows for funds to be released at the discretion of the trustees. The nature of the trust means that there is more than one beneficiary amongst which that discretion can be exercised. The trustees are generally given a “Letter of Wishes” which would provide guidance on how they would exercise their discretion.
Life interest trusts are often created when asset protection is in mind. This often arises when a married couple have children from their previous relationships and they each want to protect each other and their respective children for the future, avoiding disputes when they are no longer around.
Trusts are a complex area of law that required sound legal advice from a lawyer with expertise in this area. Whatever your needs, we will tailor our services to suit your circumstances.
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