How to use trusts to protect assets for your family
When you write a Will, you set out how you would like your assets or estate – your property, money and possessions – to be distributed amongst your friends and family.
However there are occasions when you might wish to leave some or all of your assets to a certain person yet worry that doing so could be quite risky.
It might be that they are vulnerable and you worry about how they would manage a sudden lump sum of cash. It could be that they are too young and risk making spending decisions that they’ll regret later on in life.
You could also be worried about their spouses. You might think that there is a strong possibility that they will soon be getting divorced and you don’t want part of your estate to go to their partner as part of a divorce settlement.
Or perhaps you worry that your own partner could re-marry after your death and inadvertently disinherit your children.
This is more common than you might think. In our probate practice we often see children from previous marriages who lose out because their parent remarried then died ‘intestate’ (without making a Will).
In these circumstances UK law passes everything to the new spouse who may not have your children’s best interests at heart. Quite often they have more children with their new partner and these younger ones tend to take priority.
A trust in your Will is the simple solution
All of these worse case scenarios are things we see day in day out at Hillman Legal Partnerships.
What’s most unfortunate is that all of them could have been avoided if the person who died had taken the time to put some proper trusts in their Will.
What is a trust?
Quite simply, a trust is a legal tool that lets us to ring-fence some or all of your assets. If you die the trust becomes the owner of the assets rather than the individual.
You then appoint Trustees who oversee the trust for the benefit of your beneficiaries. This allows your beneficiaries to enjoy access to money and property but they cannot give it away or lose it in the event of a divorce.
There are various different trusts designed for every eventuality.
Protective Property Trust (PPT)
This is a trust that lets you protect your property. After your death the property – or part of it - passes into the PPT and is looked after by your appointed trustees.
Your family can still live there but if your partner remarries their new spouse will not be entitled to your portion of the property.
This ensures that your children will always benefit from at least your half of the property should the worst happen.
Business Discretionary Trusts
These are essential for business owners. They set out how your portion of the business should be managed for the benefit of your family in the event of your death.
Disabled Trusts are created to provide a protected income for vulnerable adults. If you are worried that someone you wish to leave a large sum of money to could be left in a vulnerable situation, this is a great way of ensuring that they can enjoy the money you leave them without the risk of it being swindled away from them.
There are many other ways of using trusts, such as preventing children inheriting the entire estate before a certain age.
If you have any questions, or wish to discuss any of these issues in more depth, contact Hillman Legal Partnerships today on 0800 29 88 66 1