FAQs about Elderly Client Services
Common reasons for setting up a trust, either during lifetime or in a will
Avoiding Inheritance tax
These trusts are usually described as ’nil-rate band discretionary trusts’ and come into effect on death and are set up in a will. It is common to express particular wishes about age of beneficiaries for entitlement and to specify and possibly restrict the trustees powers of investment or spending of the money in the trust fund. These trusts sometimes continue for decades.
Delaying inheritance or controlling amount released over time
A trust for this type of purpose can be a trust set up whilst a person is alive or as part of a will. The intention is that the beneficiary, who my not be responsible with money, only receives a certain amount of money per annum, and sometimes the capital in the trust is protected for future generations so that only income is paid out.
Pension Plan trusts
It isi not unusual, for inheritance tax purposes to create a trust so that a pension plan is technically not owned by the person who originally started the pension. Pension plans themselves are also frequently a type of trust where the employer establishes a trust for the benefit of employees and where assets are only transferred legally to the beneficiary upon certain conditions, such as completion of a term of employment.
Asset and business Protection
Trusts are often set up to ringfence assets and sometimes such trusts are set up offshore for tax mitigation purposes. Depending on timing, assets held in trust would be protected against the original person who owned the assets going bankrupt. Creating a trust of this type, during lifetime, is another way of deliberately disinheriting family members who might be able to make a claim against the deceased’s estate if no trust was created or a trust was created on death only.