In the first mini blog in the series of FAQs About Wills and Trusts, Tom Chiffers considers the differences between trusts created in your Will or during your lifetime.
Any provisions that you include in your Will only apply after your death. Therefore, if you wish to pass on your assets before then, you will need to set up a lifetime (inter vivos) trust.
Lifetime trusts are a useful way of transferring assets from your personal estate without passing ownership to an individual beneficiary. As such they will be protected if any beneficiary were to get divorced or be made bankrupt. In addition, you can act as a trustee of the trust, meaning that you will retain control over the assets of the trust.
You may also wish to update your Will to include trust provisions. If you wish to protect assets after your death against threats such as nursing home fees, you will need to include trust provisions in your Will. For example, if all assets were to pass to your spouse on your death and they, subsequently, were to move into a nursing home then all of your combined assets would be included in any financial assessment.
Instead, if you leave your assets to a trust for their benefit, those assets would be protected for the benefit of your spouse during their lifetime and, after their death, to your children or other beneficiaries.
If you have any questions about lifetime trusts or would like more information, please contact our Tax and Trusts team on 01225 750000.