When planning your estate, a standard single will or mirror wills may not offer the right level of asset protection. A trust will, however, offers increased asset protection and flexibility, which is ideal if your circumstances aren’t straightforward.
You may have property and other assets that you want to keep secure in the long term, for example, or have children from a previous relationship who you want to ensure benefit from an inheritance. Perhaps you have vulnerable beneficiaries and want additional safeguards put in place to help manage their inheritance.
No matter how complex your estate, a trust will provides enhanced security and flexibility over your assets and their distribution.
What are trust wills?
A trust will places some or all of your assets into a legal trust upon your death. You appoint trustees to manage the distribution of your assets according to your wishes. These trustees then act in the best interests of your beneficiaries, giving you peace of mind that the inheritance you’ve left them isn’t compromised.
Why choose a trust will?
A trust will gives you much more control over your assets, such as property, money and other possessions, than other types of wills.
A single will, for example, is best for straightforward circumstances. In basic terms, you name your beneficiaries and specify what possessions you want to pass on to them once you’ve passed away. You also name your executors, who are responsible for managing your estate and carrying out the instructions in your will.
Once the executors have secured your assets, applied for probate and paid off any outstanding debts and taxes, they distribute the remaining assets to your beneficiaries as per the specifications in your will.
A trust will, however, enables you to set up specific conditions. For example, you can stipulate that a beneficiary only receives their inheritance once they’ve reached a particular age or that they receive their inheritance in instalments.
Your trustees ensure that your assets are given to your named beneficiaries in the manner specified in your will. They have a duty of care to act impartially, with reasonable care and skill, and in the best interests of the trust’s beneficiaries.
The benefits of having a trust will
By controlling how and when your assets are used, you can:
- Support your surviving partner until they pass away, while also safeguarding your assets to be passed on to your children afterwards.
- Protect the value of your estate from being eroded due to care fees.
- Preserve the state benefits being received by a beneficiary. With a direct inheritance from a standard will, the immediate ownership of assets may result in the loss of essential housing, care or disability benefits. With a trust will, this situation can be avoided.
- Protect vulnerable beneficiaries from being exploited. For example, they may have a diminished mental capacity, a physical disability, suffer from an addiction or have financial issues that may determine how they use the inheritance. Vulnerable beneficiaries are at risk of being exposed to undue pressure or influence from others. With a trust will, your trustees control the funds and distribute them only when needed, avoiding any risk of exploitation.
This legal arrangement allows your assets to be managed and distributed privately without having to pass through probate.
Types of trust wills
There are three main types of trust wills:
- A property trust will
- A discretionary trust will
- A life interest trust will
Property trust will
If you own a property, having a property trust will enables you to protect its value, or your share of its value, for your beneficiaries.
Your surviving partner can continue living in your share of the property for the rest of their life or they can move home, provided the trustee agrees, or they can rent out the property and benefit from the income that it generates.
A property trust will then ensures that the property eventually passes to your children should your partner’s circumstances change. This protects the value of your children’s inheritance if your partner should remarry, go into care or pass away.
Life interest trust will
A life interest trust will is similar to a property trust will except that you can include other assets in it, too, not just your property. This enables you to provide for your surviving partner during their lifetime. Known as a life tenant, they don’t legally own your assets but can benefit from any income generated from them, such as rental income from the property if they don’t live there or income gained from your investments. At the same time, the value of your assets is protected for the ultimate beneficiaries they’re passed on to, who then become the legal owners of the assets.
An example of when this is worth considering is if you have children from a previous relationship. You can provide for your surviving partner while protecting the value of your children’s inheritance when it’s eventually passed to them. This offers protection in case your partner remarries after you’ve passed away, which can invalidate an existing will, or writes a new will that excludes your children.
Discretionary trust will
A discretionary trust will enables your appointed trustees to use their discretion when managing the inheritance on behalf of certain beneficiaries. This is ideal if your beneficiaries are young, receive means-tested benefits or are considered vulnerable.
Your trustees have the flexibility to decide how and when the inheritance is distributed as your beneficiaries don’t have an automatic right to receive assets from the trust. This helps protect against life events, such as financial struggles or divorce, creditors trying to recover funds or others trying to assert their right to the inheritance.
Protect your assets and the people who matter most
If you have an intricate family setup, a complex estate, such as if you’re a high net worth individual, or simply prefer to have additional layers of security when it comes to the distribution of your assets, a trust will can provide the structure and flexibility you need to meet your estate planning goals.
Call us on 01322 907 000 to book a consultation with our will writer. They can review your circumstances and use their expertise to determine whether a trust will is right for you. When you’re ready to proceed, they can create a personalised will for you that accounts for your wishes and protects your assets as well as your loved ones.