Wills and how to protect your wealth

05 March 2020 Written by Ware & Kay Solicitors Category: Wills and estates

What is a trust?

A trust is a legal arrangement where individuals are chosen (known as Trustees) to look after assets for the chosen beneficiaries. Trusts can take effect during a person’s lifetime or alternatively, they can be incorporated into Wills which take effect on death. This article focuses on Will Trusts.

Circumstances where a Will Trust would be beneficial

Most of us are unaware of the various ways in which setting up a Trust in a Will can help safeguard assets and protect beneficiaries including existing family members and also future generations. Some key uses of Will Trusts are set out below:

Vulnerable beneficiaries. This could be relevant if the beneficiaries of your estate are physically or mentally disabled, are insolvent or have issues with substance abuse, for example. Setting up a Will Trust could mean that the beneficiaries are still entitled to state benefits and that your estate would not be used to pay their creditors if they were insolvent. The Trustees would protect the beneficiaries by looking after the funds for them and would only distribute funds if and when it was appropriate to do so. Where beneficiaries lack the mental capacity to manage their own affairs, it is usually beneficial for the Trustees of a Will Trust to look after their inheritance instead of a Court appointed Deputy.

Young beneficiaries. If the beneficiaries of your estate (which could include your children) are minors or young adults, you might not want them to receive a substantial inheritance until they are mature enough to manage their finances on such a scale. In a Will Trust it is possible to specify an age when the beneficiaries can look after their inheritance themselves but with the flexibility for the Trustees to use the money to benefit the beneficiaries in the meantime.

Blended families. Having a Will Trust can help couples to ensure that all of their respective children will ultimately benefit from their respective estates on death but at the same time protect the surviving spouse/partner on the first death. Without setting up a Will Trust, there is the risk if the surviving spouse inherits the estate of the first to die that they might not pass down any of this wealth to the children of the first to die.

Beneficiaries who are separated/getting divorced. Where your intended beneficiaries (including your children) are facing relationship issues, you may wish to safeguard their inheritance from your estate. These sorts of Will Trusts are not always watertight but can limit the risk of an ex-spouse/partner effectively inheriting part of your estate after your death.

Limiting care home fees. If you are concerned that the primary recipient of your estate (including your spouse) may require care in the future, a Will Trust could ensure that the primary beneficiary is provided for initially but at the same time, ring-fence some/all of your capital for future generations if the primary beneficiary needed care.

Inheritance tax planning possibilities. The rules regarding inheritance tax are complex but it may be possible to reduce the overall inheritance tax payable by your estate following your death by setting up a Will Trust

There are various types of trusts: suitability depends on your circumstances. Our specialist lawyers will be able to discuss the options available to you.

About us

The team of experts in our Private Client Team have many years of experience in acting for the widest possible variety of clients. From our offices in York, Malton and Wetherby, we work closely alongside other lawyers within our Family, Commercial, Property and Litigation teams in order to ensure that we provide our clients with comprehensive legal advice. We have STEP Trust and Estate Practitioners within our firm who hold specialist qualifications. STEP is a global professional association for practitioners who specialise in inheritance and succession planning.