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Trusts



While trusts may have been historically used by the wealthy to protect their estates and avoid paying tax, today trusts are more commonplace and used for a broader range of reasons. Put simply, they are a flexible and effective way to make a gift. Peter Pybus, solicitor at Mogers Drewett explains the benefits and various uses of a trust.

Anyone can create a trust to ensure that on death their assets, meaning property, cash, investments, land or buildings, are given away in such a manner to ensure that they benefit the intended beneficiaries. They are incredibly useful devices for all sorts of people. For example, they are used where there are vulnerable beneficiaries by people whose circumstances are changing or changeable, and where there are complex family relationships that need to be provided for.

The most basic form of trust arises where children are left money or property under a will or intestacy; this will be held on trust until they reach 18 or the age specified in the will, after which time, they can receive their share of the trust and do with it as they please. A disabled person’s trust, if properly drafted, can allow the disabled person to receive funds from the trust without affecting their benefits, which is often a cause for concern because of the hardship that this disruption can cause.

An increasingly common form of trust is the ‘life interest’ which is used by couples who are on their second marriage and where there are children from a first marriage who should be beneficiaries. This type of trust allows the husband and wife to leave their estates to each other for their lifetime, allowing the surviving spouse to live in the house or receive the income from investments and then, on the death of the surviving spouse, the property passes to the children of the first spouse to die. And in the right circumstances the life interest trust can be used to shelter matrimonial assets from nursing home fees.

Finally, a discretionary trust is one where there are a number of beneficiaries who can receive payments, but whether they do or not is the decision of the trustees who are guided by you in a letter outlining how you want the trust to be administered on your death. This may be useful if you are worried about a particular beneficiary’s state of mind, marital circumstances, or simply the ability to make good judgements regardless of their age or any perceived vulnerability.

The creation of a trust in your lifetime or on your death, and the management of a trust need not be expensive or time consuming. It is a way of satisfying the competing claims to your estate and ensures your assets are distributed in the way you want.

For further information or advice on this subject please call 01749 342 323

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