So what are Trusts ?
A trust is like an invisible barrier you can wrap around something. For example, children inherit your estate at 18 years of age if you were to die before then. Can you imagine an 18 year old with say £100,000 ! They probably wouldn’t use the money wisely for their future and may blow it all or a large chunk of it. A Children’s Trust can put a barrier around that age and you can state that they inherit at 21 years of age (for example). Trusts can also be used to avoid Inheritance Tax, make sure your children still gain access to your belongings and can even block the local authority from taking your home from the dreaded care home costs.
Here at David Nicholls, we can arrange this for you, contact us now for a free quote.
Life interest Trust
This is normally set up to ensure that a partner or spouse from a relationship later on will not lose the right of somewhere to live but also making sure that the children from a previous relationship do not lose their inheritance. An example of this is if say the husband dies, the wife then gets re-married later on and let’s say that she then dies. The new husband could walk away with everything and the children from the original husband and wife get nothing.
Discretionary Trust
A discretionary trust gives power to the designated trustees so that they can give different amount of money to a beneficiary when they need it or can wrap a barrier around a home so that it doesn’t form part of the state. This can avoid certain percentages of Inheritance Tax or can block future spouses or partners from gaining complete control over the previous children involved.
Rights of Occupation Trust
This is a trust whereby it protects assets from creditors and from the asset in question being passed to someone you don’t want it to go to.
Severance of Tenancy or Tenants in Common
Scenario – let’s say a couple are together but later decide to leave each other. They have both brought a home together and maybe they have both put equal amount of deposit money into the mortgage to buy the home in the first place. The man or the woman may not want the now ex partner getting everything if they die. A Severance of Tenancy allows 50% of the proceeds to go where they wish for and not automatically go to the now estranged partner if they die. This can be the parents or the children for example.
A good example would be man (A) gets married to wife (B). They split up but they keep the property in both names. Man (A) is worried that if his ex-wife (B) gets remarried and then he dies, their children from the marriage will receive nothing as the new husband would walk away with everything SO he decides to give his children an equal split of half the house so if he dies, his children gets his 50% and the ex-wife (B) would get the other 50%.
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