Whilst most clients want their Wills to be as simple as possible, depending on their, or their family’s circumstances, the use of a trust may be appropriate.
The most common type of trust is established when funds are left to young beneficiaries, often children or grandchildren, and you do not want them to inherit large sums whilst they are too young. The inheritance would be contingent on them reaching a certain age, for example 21 or 25.
The people named as your executors and trustees would have to manage and invest the inheritance on behalf of the beneficiaries until they reach the age specified in the Will. Your trustees (if the necessary powers have been granted in the Will) can give some of the funds to the beneficiaries before they reach the specified age if it is necessary or desirable, such as for university fees or a deposit for a house.
A discretionary trust can be used if you have concerns that the people you wish to benefit under your Will would not be able to manage large sums of money. This type of trust would also be appropriate if you are worried that the money you are leaving could be claimed by third parties, such as during divorce or bankruptcy proceedings.
Your trustees would manage the inheritance and would have complete discretion as to which beneficiaries (from a list or class of people you name in your Will) benefit, when, why and in what shares. You would leave a non-binding letter of wishes providing guidance to the trustees as to how you envisage them distributing the funds and under what circumstances they can make distributions.
Another common Will trust is a life interest trust. This trust would be used to provide for one beneficiary for their lifetime, usually a surviving spouse or civil partner, but you wish to protect the capital within your assets for other family members in the future. This is very common where there are children from a previous relationship.
Any cash assets within your estate would be invested to provide an income (for example interest and dividend payments) to your surviving spouse or civil partner. They would also have the right to live in, or receive the rental income, from any properties that you own. After their death, the funds and assets would pass to your beneficiaries, giving you certainty that they will eventually inherit.
There can be tax implications in including some of the types of trust set out above which our Private Client Solicitors would be able to advise on when meeting with you to take your instructions.
Please contact a member of our Private Client team on 01892 515022 if you would like to discuss how best to structure your Will.
This blog is not intended as legal advice that can be relied upon and CooperBurnett does not accept any responsibility for the accuracy of its contents.