A Family Trust can run for up to 125 years but can be closed down by the trustees at any time. Most assets can be placed into trust, your home, savings and most investments (other than IAS’s and premium bonds which must be help in our individual names).
They are also known as a Lifetime Trust, Asset Protection Trust, Home Protection Trust and many other names. The principal benefits are that a trust can provide you with control, protection and flexibility. Lifetime Trusts are nothing new; they have been around for over 700 years and are still being used today for exactly the same purpose as 700 years ago; to provide a vehicle to protect inheritances for your loved ones by mitigating a number of threats.
Modern day threats include
The costs of Probate, often amounting to thousands of pounds.
Delay of probate, normally 6-12 months, providing immediate access to the trust fund for beneficiaries.
Sideways disinheritance, where assets pass sideways to a new spouse or partner after first death and ends up going down the wrong bloodline.
A Family Trust can protect wealth against all the what-ifs above, some of them likely in their right but collectively a very real threat to maximizing inheritance for your loved ones.
They can also be an effective tool for mitigating care home fees if set up at the right time and for the right reasons, but this is a complex and constantly changing area of law where expert guidance is essential.
How we can help
It is as true today as 700 years ago that a Family Trust is the backbone of any estate planning. They are used routinely to protect against various threats and risks. We can advise you on the benefits of setting up a Family Trust, whether the intention is to protect your assets from Inheritance Tax, care fees, potential claims against your estate, or simply to ring-fence assets for your loved ones.
There are various types of Family Trusts, all of which have different pros and cons, and different tax and practical implications. Again, we can provide you with comprehensive advice in relation to these matters.
We can also provide a range of cost-effective services to trustees, who may find that they need ongoing tax and practical advice regarding a Trust.
Questions to think about
There are three parties:
- Settlor; the person setting up the Trust and putting their assets into the Trust.
- Trustees; the people who hold the assets on behalf of the beneficiaries and who manage the trust under the terms of the Trust Deed, the rule book for the Trust.
- Beneficiaries; the people who will benefit from the Trust. This includes your loved ones, often children and grandchildren.
You retain control during your lifetime because the Trust\Deed say that whilst you are alive you are the only person who can do three things:
- Remove and appoint Trustees; the Trustees act together as a body, so if you want to do something that another Trustee does not want to do you can fire them and do whatever it is you want to do!
- Add or remove assets to your Trust at any time
Your house, savings and investments other than investments that must be held in your sole name but we would advise you in relation to this as part of the process of setting up a Trust.
You would normally appoint yourself and other family members, often grown up children but we would advise you on this as part of the process of setting up a Trust.
The deliberate deprivation rules are the rules the local authority must follow in determining whether the trust was set up to avoid care fees. As long as you are fit and healthy and there is no foreseeable need for care. If you have been diagnosed with any form of dementia, Alzheimer’s then it is too late to set up a Trust that will be effective in mitigating care home fees.