Trust and Estate Planning
Trusts offer a means of holding and managing money or property for people who may not be ready or able to manage it for themselves. Used in conjunction with a Will, they can also help ensure that your assets are passed on in accordance with your wishes after you die.
A trust is an obligation binding a person called a trustee to deal with property in a particular way for the benefit of one or more 'beneficiaries'.
A trust might be created for a number of reasons:
- To make provision for your family, now and in the future
- To assist in effective tax planning, especially in reducing the amount of Inheritance Tax payable on death
- To make a gift to a loved one, but with conditions (e.g. you can set guidelines on how your trustees should administer the trust, and at what age and in what circumstances the beneficiaries can have access to their share).
- To protect assets that for some reason, you think it inappropriate that a beneficiary has full and free access to.
Solving an Inheritance Tax problem tax efficiently, like passing assets to those left behind, may require the use of trusts.
Life Policies in Trust
Why Write Life Policies In Trust?
Putting life policies in trust is recommended for most family protection insurances - the policy benefits are independent of the estate, are not included in Inheritance Tax calculations and can be paid out immediately without waiting for probate. Most new and existing policies can be placed in trust. Nominating the beneficiaries for death in service benefits and death benefits associated with some pension plans can have the same affect.
This can significantly reduce Inheritance Tax liabilities as well as ensuring family members and dependants receive financial support without delay.
A potential Inheritance Tax liability could be settled by writing a life policy in trust and using the proceeds to pay the liability.