Trusts
What is a Trust? And Why Should You Use One?
A Trust is a legal arrangement that allows you to give assets (such as money, property, or investments) to someone else to look after on behalf of your chosen beneficiaries.
You, as the person creating the Trust, are called the Settlor. You appoint Trustees, people or professionals you trust, to manage the assets according to the instructions in the Trust document. The people who benefit from the Trust are known as Beneficiaries.
Trusts can be set up during your lifetime (a lifetime trust) or written into your Will to take effect after your death (a Will trust).
A Trust will assist with the following:
- Protect your assets for future generations
- Control how and when your beneficiaries receive their inheritance
- Provide for vulnerable or young beneficiaries who may not be ready to manage money
- Reduce inheritance tax liability in some circumstances
- Avoid probate in certain cases, making the process quicker and more private
Why use a Trust in addition to a Will?
While a Will sets out your wishes for how your estate should be distributed after your death, a Trust can offer additional control, flexibility, and protection, both during your lifetime and after you're gone. Using a Trust alongside your Will can enhance your estate planning in several important ways.
Benefits:
Key Benefits of Using a Trust Alongside a Will:
Greater Control Over Inheritance
A Trust lets you decide how and when beneficiaries receive their inheritance, ideal for young children or those who may not be financially responsible.
Protecting Vulnerable Beneficiaries
If a loved one has a disability, addiction, or receives means-tested benefits, a Trust can safeguard their inheritance without affecting their support.
Avoiding Probate Delays
Assets held in certain types of Trusts can pass outside of probate, helping to avoid delays and keeping your affairs private.
Asset Protection
Trusts can help protect your estate from risks like divorce, creditors, or bankruptcy, especially helpful in blended families or business situations.
Inheritance Tax Planning
Trusts may reduce the overall inheritance tax bill, especially for larger estates or where you want to make gifts over time.
Providing for Different Needs Over Time
You can use a Trust to provide for a spouse during their lifetime, while preserving assets for children or grandchildren in the future.
Wills and Trusts work best together- a Will ensures your wishes are legally recorded, while a Trust allows you to shape how your legacy is managed and protected.