Trusts can be created within your lifetime or upon your death (within your Will). When creating a trust, you are passing the control of managing certain assets to your chosen trustees. They will manage these assets on behalf of your chosen beneficiaries. There are strict duties placed upon trustees to ensure that they carry out the terms of the trust correctly.
Trusts can be a useful tool to protect your assets from nursing home fees, inheritance tax, means tested benefits or potential residential care home fees. They can also be used if you don’t want certain assets to pass to an individual outright for e.g. if you have children from a previous relationship and you want to ensure that your children’s inheritance is protected.
One might consider creating a Life Interest Trust to allow someone to have the right to the income of an asset during their lifetime but, for the capital to pass to chosen beneficiaries after the Life Tenant’s death.
There is also a discretionary trust to consider. Under a discretionary trust, none of the chosen beneficiaries have an automatic entitlement to either the income or capital of the trust asset. Instead, it is at the trustee’s discretion how much of the income and capital to pay and to which named beneficiary.
You may consider setting up a trust for vulnerable persons. This includes trusts for minor beneficiaries, trusts for disabled beneficiaries and protective trusts.
It is understood that parents and family members may want to provide for the future financial security of those who are unable to manage their own affairs because they are minors or because of a physical or mental impairment. Setting up a trust is also a useful tool to protect their entitlement to any means tested benefits.
We can give advice on setting up or terminating a trust, we can draft the trust document for you and we can advise trustees about managing the trust whilst adhering to their many duties.