What are will trusts?
A will trust is any type of trust that has been created by your will and comes into effect on death. The assets that are placed into trust are then looked after by your trustees for the benefit of your chosen beneficiaries. Partner and Wills and Estates Solicitor, Emma Garfitt, talks through the different kinds of will trusts and why they can be beneficial to have.
Why have a will trust?
Will trusts are tailored to meet the particular needs of an individual. Some of the reasons for using a will trust are:
- So funds can be looked after by trustees for beneficiaries who are unable to manage their own money or risk squandering an inheritance
- To provide for both a new spouse or partner and children from a previous marriage
- Tax mitigation
- To set the age you want beneficiaries to inherit
There are different types of will trust that can be included in a will, including the following:
Life Interest Trust
Your beneficiary has the right to income from assets, or the right to live in a property for their lifetime or for a fixed period of time. The assets in the trust then pass to other beneficiaries at the end of the life interest.
It is also possible to include provision for capital payments to be made to the beneficiary with the right to receive income.
Discretionary Trust
Your trustees manage the assets placed into trust and they decide how and when to distribute them to your chosen beneficiaries. Some advantages of this are:
- Beneficiaries can get their inheritance over a period of time rather than as one lump sum;
- it will not affect the amount a person on means-tested benefits receives;
- money can be given to beneficiaries most in need;
- it provides protection for vulnerable beneficiaries;
- beneficiaries can be added to the trust after your death.
Bereaved Minors Trust
These are set up for children to receive the assets when they turn 18. An 18-25 trust can also be created to delay your children receiving the inheritance to a later age.
Disabled Person’s Trust
This provide tax advantages for trusts where the beneficiary is a disabled person.
For more information on will trusts and other will writing services, get in touch with a member of our wills and estates team on 033 3344 9609 or email [email protected].
Author: Emma Garfitt, wills and estates.