The Benefits of a Trust
- -> Avoid probate
- -> Family disinheritance
- -> Unreliable family
- -> Incapacity
- -> Forced heirship
- -> Long term care
- -> Tax planning
Avoid ProbateProbate is expensive both in terms of time and money. A Trust can avoid this expense and ensure the assets continue to be available with no interruptions.
If George dies there is no change to the house. When Betty dies, the Trust still continues. The Trustees can decide to sell the house and invest the proceeds, or lease the house and receive the income. There is no delay because probate is not required.
Family DisinheritanceGeorge and Betty have two children. Their Wills leave their assets to each other. When George dies, Betty marries John. Betty dies five years later but made a new Will leaving her assets to John. George’s children receive nothing.
As the assets are within the Trust. Their children still receive the whole estate.
Unreliable FamilyFrom addiction, debt, divorce to something else – any assets gifted or left by a Will to an unreliable family member forms part of a settlement claim.
George and Betty transfer their house to their son Michael, whom they are close with. Michael recently married Vicky, who doesn’t get on with George or Betty. The relationship becomes strained. George and Betty end up being asked to leave the house by Vicky.
If George and Betty transferred their property to the Williams Family Trust then Vicky cannot make them leave.
IncapacityIf we lose our mental capacity either through injury or illness then we lose the ability to manage our property. The property passes on via an existing Will or intestacy.
If George loses mental capacity, it has no effect on the property because it is owned by the Trust.
Forced HeirshipGenerally, we think of Sharia law when thinking of forced heirship, but many other nonmuslim countries also impose these rules. The UK, France and Spain all have their own forced heirship rules.
The house within the Williams Family Trust is not subject to any forced heirship claims. It is ringfenced.
Long Term Care CostsMany countries have their own assessment and charging structures for long term care. Often, the assets of the person requiring care may require to be sold or is subjected to a charge by the care provider.
The Williams Family Trust could ringfence the property against such claims.
Tax PlanningMany countries impose personal taxes on individuals where they either reside or hold assets in that country.
George and Betty reside in the UAE – which doesn’t impose personal taxation. They have £1.5m invested in their Trust. They return to the UK to be closer to their children, who live in Europe. The investment account held by the Williams Family Trust does not bring it within the remit of UK tax legislation.
Paul Hogarty, Solicitor