A Trust may be established during your lifetime or in your Will. Typically Trusts are established in a Will to provide for the care of your children or for a disabled relative. By using Discretionary Trusts created by a Will you may benefit a disabled relative without affecting their entitlement to means tested state benefit. This can be of great importance in protecting the financial interests of a disabled person and also providing for their future care.
The Law states that a beneficiary cannot receive money or property left to them until they reach a minimum age of eighteen. By drafting a Trust into your will you can ensure that any underage beneficiary receives money from your estate to provide for their maintenance, benefit or education.
Trusts can also be created during your lifetime through the preparation of a Trust Deed. Lifetime Trusts vary from a simple Trust which provides that funds are held by people nominated by you, known as your Trustees, to benefit a person or persons of your choice. If you wish to give to your Trustees the power to choose whom they benefit then you may create a Discretionary Trust giving to your Trustees the power to benefit at their discretion a person or persons of their choice from a list of people provided by you. A Discretionary Trust is of particular relevance in providing funding for a disabled person or children.
Trusts can also be used as a vehicle for mitigating Inheritance Tax liability. By making payments into Trust, providing the person making the payment survives for seven years from the date of the payment, then any funds placed into Trust will be deducted from their estate for Inheritance Tax calculation purposes. If the person creating the Trust benefits from the Trust then the Trust will not be effective for mitigating Inheritance Tax save in exceptional circumstances.
Vincents Team of Solicitors and Financial Advisors can advise you further about the implications of drafting a Trust and the Inheritance Tax implications of placing funds in Trust. If you wish to contact us please speak to Chris Mathews.
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