TRUSTS AND ASSET PROTECTION
A lot of people get confused or concerned about trusts; this is understandable. So here is our simple guide to them.
Placing your trust in the right people
Trusts are often misunderstood. A lot of people feel that by putting an asset (like money or property) into a Trust, it means that some remote stranger, probably a solicitor, is now in control.
However, that is not true. Yes, it can happen – but that is not the way we work at Hamilton Legacy. A professional, such as a solicitor, can be appointed and there are circumstances where that may be appropriate, but we like to ensure your choice of Trustees, such as your family, are appointed.
When you put an asset into Trust, you are ring-fencing it for your chosen beneficiaries (the people you want to benefit from it) but only according to the rules of the Trust. The Trustees are a small group of trusted people chosen by you. It is the Trustees’ job to follow and enforce those rules.
A Discretionary Trust can be added to your Will, leaving it up to the Trustees’ discretion how to manage your assets for your beneficiaries. As always, we draw on our knowledge to tailor our service to what is right for you.
SOME EXAMPLES FROM OUR OWN CLIENTS
Let us take a look at Trusts in their many forms and uses via these examples of where we would use a Trust to achieve your desired outcomes.
Richard has two children from a previous marriage, Daniel and Grace. He married Diane after his divorce from their birth mother, Kate. He wants Diane to be secure, to be able to live in the house for life and have the flexibility to be able to move but, ultimately, he wants the house to pass to Daniel and Grace. A Trust in his Will means his wishes would be respected.
SAME SEX PARTNERS
Sarah and Jane have lived together for 20 years. They have accrued a comfortable estate between them over the years. As far as they are concerned, they are married. They have two children. But they are not married, and they will have a large tax bill when each of them die and would rather avoid this bill. A Will Trust could help them save or mitigate this tax.
Anthony and Kelly have three adult children. They have always been a close family but relations rapidly deteriorated with Chris, their son, when they had a slight disagreement with his wife. It has resulted in them not speaking for years and Chris and his wife will not let them see their grandchildren. They feel very upset and aggrieved and do not wish him to benefit from their estate in an equal way to their other children. Using a Trust here could help achieve their wishes but also save unnecessary heartache.
Winston is married to Tina. They have two children, Dion and Sam, and Winston has a child, Andrew, from his first marriage. Winston owns a successful business that he wants to keep trading after his death as Tina will require an income and Andrew works in the business and has taken an interest in running it going forward. These clients might benefit from the use of a specific Business Trust.
Mo and Naz have worried about care costs for the last five years. They are fit and healthy for their age. They want their house to pass to their two children, Kal and Jay. We could use a Trust to achieve this.
CONCERNS OVER REMARRIAGE
William and Sue own their own house, several investment properties, cash in joint names, ISAs and bonds. William has children from a previous marriage and they have children from their marriage. Sue stands to inherit substantially from her parents at their death. They have concerns over remarriage, protecting all the children involved and ring-fencing inheritances. There are Trusts that can protect the assets of the deceased without it impinging on the remaining spouse.
CONCERNS OVER AN ADULT AFTER DEATH
Gina has two adult children, Suzy and Megan. She adores them both but they are very different characters. Megan has always been sensible and has a home and a good job. Suzy has always been wild. She has had issues with drugs and alcohol in the past and, although seemingly through that phase of her life, she finds it very difficult to hold on to money and Gina has had to bail her out numerous times. Gina wants to treat them fairly at her death. Trusts are commonly used to protect vulnerable persons.
FLEXIBILITY IN CHARITABLE GIVING
Tony has always given to charity, to varying degrees, throughout his life. There are a couple of charities he has always supported but his views on the others change and he has “fallen in and out of love” with many of them. He knows he wants to gift a certain amount of his estate to charity at his death but he is undecided which charities he would state in his Will. Using a Charitable Trust would be an ideal solution for him. Also, if he decides to gift 10% or more of his estate’s value to charity, he can save on Inheritance Tax.
Tailoring a Trust for you
Even for the most complex family dynamics and future predictions, we can tailor a Trust to make sure it works for you, protects those you love and avoids unnecessary heartache and stress for those left behind.
The Trustees can be whoever you want with the peace of mind you get from knowing it was your choice.
“Including a Trust in your Will is a decision not to be taken lightly, but they can be very effective when used well.”
Frequently Asked Questions
How can I make sure my children get the house if my partner remarries?
If your Will leaves everything to your partner, at your death they now own everything. All the assets are now theirs so, if they remarry, their new spouse is entitled to half of those assets and, indeed, if the new spouse outlives your partner, the new spouse may end up with ALL the assets. The new spouse has no obligation to leave your children anything. There are ways around this to protect the assets for your children and it requires the use of a Trust within your Will which becomes active at your death.
If I die and my partner remarries or meets someone else, our kids will still get my share of their estate…right?
No, not necessarily. If your Will gifts your share of the estate to your partner / spouse, that partner now owns everything. If they remarry then their new spouse has a right to half of what is now your partner’s estate (the whole of your combined estate). If your partner’s new spouse outlives your partner, they may end up with it all. If they do, they have no obligation to leave your children anything as it now their estate and the children are not theirs! As above, we could use various Trusts to achieve the appropriate protection of your assets for your children without affecting your spouse, when you die.
What Happens Now?
“It’s never easy talking about death, but we gently guide you through this – making sure those you love get what you want them to have.”
Feel free to contact us for an in-depth discussion about your options, our fees, the process or anything else. Just pick up the phone or send us an email. We know from previous client experience that you will be pleased you did.