Trusts
How can I secure my legacy for future generations?
One of the main reasons for making your will and planning your estate is to ensure your loved ones receive what you’d like them to have when you pass away.
But it’s just as important to safeguard those assets, so the money and possessions you leave to your beneficiaries are protected from potential risks.
One of the most effective ways to do this is through the use of trusts, which help ensure your assets are passed on securely and according to your wishes.
Risks to your assets
When assets such as cash or property are left to beneficiaries ‘absolutely’ they become part of the beneficiary’s estate. This means they are owned outright by the beneficiary.
Although it may be your intention to leave your home or wealth entirely to your children or grandchildren, passing inheritance on in this way puts it at risk.
If one of your beneficiaries falls into debt, for example, those assets could end up going to pay creditors; if a child or grandchild gets divorced, their inheritance would form part of their ex-spouse's settlement.
Fortunately, with the use of trusts you can protect valuable assets left to your beneficiaries from these kinds of eventualities, now and in the future.
What is a trust?
A trust is like a secure box; a safe place where you can set aside assets for your beneficiaries while shielding them from third parties.
Trusts allow you to transfer a range of assets to your beneficiaries securely, including cash, property, shares, and land.
There are various types of trusts, each with their own benefits, so you can tailor your choice to suit your specific planning needs.
Regardless of the type of trust, no one can access, withdraw, or use assets held in trust without the permission of the trustees.
Roles and responsibilities of a trust
The person who creates or ‘settles’ the trust is known as the Settlor; the people who are to benefit from the assets placed in trust are the ‘beneficiaries’.
Once assets are placed in trust, they are no longer part of the settlor’s estate. Instead, they are the property of the trust and are looked after by the trustees – trusted people chosen by the settlor to safeguard assets in trust on behalf of the beneficiaries, according to their best judgement and the settlor’s wishes.
You can choose anyone to be a trustee of your trust; however, the role comes with legal as well as moral responsibilities. For this reason, it’s advisable to appoint professional trustees alongside whoever you choose.
Countrywide Tax & Trust provide a range of professional trustee services. Get in touch to find out more about appointing a professional trustee.
Using trusts to mitigate risks
Trusts are a valuable estate planning tool that let you pass assets on to your beneficiaries while protecting them from potential risks such as bankruptcy, divorce, or remarriage.
They can also help you reduce certain Inheritance Tax liabilities and ensure assets are looked after until such a time when your beneficiaries are ready to inherit.
This is especially useful if you are transferring cash or property to a child or vulnerable adult; trusts can also be used if a beneficiary’s life circumstances – such as struggles with addiction – might place them or the assets at risk if they receive their inheritance outright.
Through the use of strategic trusts, we help you create a personalised estate plan, so your beneficiaries inherit securely, protecting them and your assets.
Get in touch with our helpful team to find out more about trusts.