Wills In Trust – Why & How?
While many people will opt for a very straightforward will to account for their estate after they die, there are a number of reasons why a will in trust might be a more suitable arrangement and that is what we will look at in this article.
A will in trust basically means that instead of a spouse or child becoming the legal owner of the deceased’s estate at the time of death, the estate is kept as a separate entity with a stated trustee and beneficiary.
Common reasons for making a will in trust include:
- To keep capital and assets aside in a secure manner for a child or children to inherit once they reach a certain age (often 18 years old).
- To reduce the inheritance tax liability of the beneficiaries compared with a traditional will arrangement.
- To provide an income for loved ones to support them and ensure they have everything they need.
There are also a number of different types of trust with different outcomes for each;
First you may consider whether each beneficiary should get a fixed amount determined by you or whether you should allow them to decide this among themselves when they receive ownership of the trust. The latter may give them flexibility but it might also cause tension among the group.
Another type of trust is know as an Interest in Possession trust which essentially means a spouse of other beneficiary can use the contents of the trust during their lifetime but it must then be passed down to other beneficiaries (usually children).
Alternatively, an Accumulation and Maintenance trust could be setup which would be used to provide an ongoing income to a family or other loved ones so as to pay for things such as university fees, living costs, etc.
These are the main types of trust but there are other arrangements that you might want to consider so speak to a solicitor about these.
The trustee is one of the main parties in an arrangement and he/she is responsible for administering the trust and for making decisions as to the most appropriate way of managing the assets held within it.
The 4 main characteristics of a trustee are: they should be trusted by you (it goes without saying), they should ideally have some experience in financial matters, they should have the best interest of the beneficiary at heart and they should be expected to outlive you.
More information on trusts can be found on the government website here.