A Third of Wills Include Trusts – Should Yours?
Posted on in Tax, Trusts & Succession
You may be surprised to learn that around one third of Wills include a trust. While trusts are often associated with complex tax planning, they are, in fact, commonly used in everyday Wills for practical and protective reasons.
A trust in a Will allows appointed individuals, known as trustees, to manage assets on behalf of beneficiaries. Rather than inheriting assets outright immediately, the trustees hold and manage those assets in accordance with the instructions set out in the Will.
Depending on the circumstances, a trust can help protect a partner's right to remain in the family home, safeguard children's inheritance, support vulnerable beneficiaries and delay inheritance until beneficiaries are ready to manage it responsibly.
Whether you have a blended family, young children or simply want greater control over how your estate is managed after your death, including a trust in your Will may be worth considering. Trusts can provide practical protection and flexibility, helping to ensure your assets are used in the way you intend and your loved ones are cared for in the future.
Providing for a partner while protecting children’s inheritance
A common concern is how to provide for a partner while also protecting assets for children.
For example, someone may wish for their partner to continue living in their home after they die, but ultimately want the property to pass to their children.
Leaving assets outright to a partner may mean there is no guarantee those assets will later pass to the intended beneficiaries. This may be a particular concern where there are children from a previous relationship or where there is a desire to preserve family assets.
A trust can help address this concern as it can allow a partner to continue living in the property or benefit from assets during their lifetime, whilst ensuring those assets are preserved for children in the future. The trustees are responsible for managing the arrangement and ensuring that the terms of the trust are followed.
This can provide reassurance that both a partner and children are protected, and that assets ultimately pass in accordance with the person’s wishes.
Protecting younger beneficiaries
If a beneficiary is under the age of 18, they cannot inherit assets outright.
Many people also choose to delay inheritance until a later age, such as 21 or 25. This recognises that beneficiaries may not yet be in a position to manage significant assets at a younger age. In the meantime, trustees can ensure that funds are available for appropriate purposes, such as education, housing, or general welfare.
This approach can help ensure that an inheritance is preserved and used responsibly.
Supporting vulnerable beneficiaries
Trusts can also provide important protection where a beneficiary may be vulnerable or may need assistance managing their financial affairs. This could include situations where a beneficiary has health concerns, lacks financial experience or may be at risk of financial exploitation.
By placing assets in trust, trustees can manage funds on the beneficiary’s behalf and ensure they are used appropriately and in their best interests. This can provide long-term stability and protection, while still allowing the beneficiary to benefit from the assets. In some trusts, the person making their Will can leave guidance alongside the Will stating when and for what purpose a beneficiary should use those funds.
Providing flexibility where circumstances may change
In some cases, it may not be possible to predict exactly what beneficiaries will need in the future. Trusts can provide valuable flexibility in these circumstances.
For example, Discretionary Trusts in Wills allows trustees to decide how and when assets are distributed, taking into account the beneficiaries’ needs at the time. This allows trustees to respond to changing personal, financial, or family circumstances.
This flexibility can be particularly helpful where there are multiple beneficiaries, or where future needs may be uncertain.
How trusts work in practice
When a trust is created in a Will, the appointed trustees become responsible for managing the relevant assets. Trustees are often family members, friends or professional advisers and they are required to act in accordance with the terms of the trust.
Trustees may be responsible for managing investments, maintaining property, or distributing funds as appropriate. Choosing suitable trustees is therefore an important part of the Will-making process.
Planning ahead
Every individual’s circumstances are different, and there is no one-size-fits-all approach.
Trusts are used in a wide range of circumstances and are often included in Wills to provide practical protection and flexibility. They are a practical tool that can help address common concerns and provide peace of mind.
Careful planning can help ensure that your wishes are carried out and that your loved ones are provided for in the way you intend, both immediately and in the future.
How can Tozers help?
Tozers can guide you through the full Will-making process and help you decide whether a trust is appropriate for your situation. We will take the time to understand your family circumstances, your assets, and your priorities, and then explain your options in clear, straightforward terms.
If you would like to discuss your plans or simply understand what your choices are, please get in touch to arrange an appointment.