Many people use trusts in their Wills so that they can ensure that their interests are met.
What is a Trust?
A Trust is a legal arrangement where assets are transferred to trustees for the benefit of the beneficiaries. The trustee takes legal ownership of the property. Whereas the beneficiary is the person that is selected to receive benefits. Trust interests can be as part of a class or fixed.
When should you use a Will Trust?
Trusts can be used for many reasons including maintaining control and bloodline planning.
Our most popular planning tool would be a life interest trust known as a property protection trust. This will trust is designed to protect the family home after first death. The life interest is in favour of the surviving spouse. Should they wish can reside in the property for life. If the surviving spouse is wealthy in their own right they can give this away to the beneficiaries. This would be a potentially exempt transfer.
On second death the property in the trust is absolutely transferred to the beneficiaries. This prevents children missing out should the surviving spouse re-marry.
We are a partner firm of Help and Advice Directory as experts in this area.
Will this save me inheritance tax?
Inheritance tax is charged at 40%. Everyone has a nil rate allowance of £325,000 and if they have children (including adopted, guardianship or step) then also the residential nil rate allowance of £175,000. However by utilising a life interest trust you are not only keeping control but you are using your spousal exemption. Anything passed to your spouse is exempt.
These trusts can help plan for inheritance tax and ensure that you are using all your allowances.
Help and Advice Directory have outlined more information about inheritance tax here.
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