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Will & Lifetime Trusts

Protect what you've worked hard for...

Similar to a Will Trust, a Lifetime Trust protects assets but are activated immediately as opposed to upon death.

A Lifetime Trust enables the ownership of an asset to be transferred in whilst an occupant continues to reside and live in the property. However, it is important to seek the correct advice with it comes to the assessment of care costs as this mechanism does not automatically deem an occupant exempt from care costs.

Will Trusts

A specific mechanism used to protect property and those living within it, a Will Trust is a legal entity created within a Will. It allows those beneficiaries to receive income or goodwill or the property without being the legal owner. A third party is appointed to manage the Will Trust on behalf of the beneficiary. This third party is known as a trustee.

This example of planning can be used for children who are not of legal age to benefit from a property, be it the rental value or a sale, whilst having guidance from a trustee who simply manages the Will Trust without financially benefiting from its value.

This type of estate planning requires much thought and there are tax implications to consider, as well as health and social care in later life.

We advise on all areas of Will Trusts and from robust and sensible planning following our advice, your assets can be protected in the interest of your beneficiaries is the most efficient manner with a long-term view in mind.


Will & Lifetime Trusts Explained

Why not simply name your beneficiaries in your will? Why bother with setting up a trust? Well, there are a number of reasons why a will trust may be best for your circumstances.

A common reason is that those who are set to inherit are not best placed to manage their inheritance. For example, a child inheriting the proceeds of your estate would have little understanding of what to do with the money and no capacity to set themselves up for the future.

With a will trust, individuals can be named as trustees and it is their role to administer the trust in line with your wishes, ensuring that beneficiaries are taken care of. Usually, at least two trustees are appointed and there is no reason why they cannot be the same people as those named as executors (those appointed to carry out the terms of the will).

The type of trust in place will determine the exact duties of the trustees but generally, trustees may be called to make investments, act fairly to all beneficiaries, keep beneficiaries updated and act in accordance with the trust and the deceased’s wishes

Clearly, acting as a trustee is not an easy task and carries a great deal of responsibility. As such it is wise to take care before appointing someone and be sure to talk to them about it first; making clear what the role would entail and what your wishes are.

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Will & Lifetime Trusts FAQs

What is a Lifetime Trust and how it is different from a Will Trust?

A Lifetime Trust is established whilst a person is alive and is created separate from a Will, unlike a Will Trust. However, just like a Will Trust, it is a specific mechanism that protects an asset; namely a property.

Why would you create a Lifetime Trust and place your property within it?

There are many tax implications of establishing a Lifetime Trust but it can ensure specific properties are passed to certain beneficiaries prior to the original owner passing away. This can be attractive to those with multiple marriages and/or partners across their lifetime. Also, it ensures the property is passed to the intended beneficiaries even if a Will is not present.

What are the tax implications of establishing a Lifetime Trust?

Tax advantages should never be the main reason for establishing a Lifetime Trust. If the property is over the current threshold of £325,000, it can still be liable for Inheritance Tax and those who place properties into a Lifetime Trust may incur an immediate 20% charge on any balance over £325,000. The property may attract an annual 6% tax liability on the value above £325,000, too.

What is the first step to establishing a Lifetime Trust?

Speak to a professional and trusted adviser in complete confidence. The taxation landscape alone is an extremely important element to consider, with legislation being open to change it these politically volatile times. By not following correct advice, or taking it upon yourself to establish the facts, you can end up far worse off and paying vast sums of taxation to HMRC

What is a Will Trust?

A Will Trust is a specific tool used within a Will to protect property and to defer the financial gain, be it rental income or proceeds from a future sale. This is used to help children of the deceased who are not of legal age to retain future control of the property upon them becoming an adult.

Do I need to own a property to set up a Will Trust?

Yes. This mechanism is specifically used to manage the value from properties within the trust in the event of the owner's death.

What is a trustee and what role do they play?

A trustee manages the Will Trust but does not financially benefit from the arrangement, neither do they ever own the property. The simply ensure the asset within the Will Trust is correctly maintained and all proceeds either from a sale or rental income are passed to the beneficiary/beneficiaries when they reach legal adult age.

How does a Will Trust differ from other types of trusts?

A Will Trust is created upon your death whereas a Lifetime Trust is established during your lifetime. There are many tax implications when it comes to Will Trusts so it is vital you speak to a professional adviser who can navigate the advantages as well as liabilities of establishing a Will Trust.

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