An Estate Protection Trust (a Discretionary Trust or combination of Discretionary Trust and Interest in Possession Trust) allows you to put some or all of your estate into a Trust on death; that Trust is then managed by your Trustees, who run the Trust and distribute the contents to your Beneficiaries using your wishes as guidance. A Trust can last 125 years, and is an extremely powerful tool protecting against multiple threats to your estate.
An Estate Protection trusts provides extraordinary protection for your family wealth:
An Estate Protection Trust can protect what you leave your partner or a child if they get divorced after you die; if you left them money through a Will alone, they could lose sometimes as much as 70% of it on the financial settlement of a divorce – this can potentially happen multiple times and not just to your partner, but your children too, each time taking a slice of what you left. By having the assets in Trust, and not in their estate, it’s protected. Why would you want half of what you left your children to potentially go to someone you’ve never met?
Whilst an Estate Protection Trust will not benefit you directly for inheritance tax purposes, it does mean that when a Beneficiary passes away, there’s no inheritance tax on their death (as the assets are not in their direct estate). The remaining Beneficiaries continue to benefit from what’s in the Trust (i.e. the wealth can be benefitted by generations). Our Trusts are designed to benefit from the available Nil Rate Band and Residential Nil Rate Band, meaning you can still benefit from your tax free allowances on death.
Unlike a Will, an Estate Protection Trust allows you to say exactly what you want to happen and when, and not be restricted to a legalistic point-in-time snapshot at the time of death. With a Will alone, you have no control over what happens to the what you’ve left behind when you die. You can leave instructions for your Trustees providing guidance, such as whether money should be used for travel or education, purchasing property, perhaps staggered over age attainments for your children – you could specify financial support for Guardians who may be looking after your children, to help them cover costs. Ultimately, a Trust allows you to be flexible in a way a Will can’t.
As part of our planning process, we will determine whether a Trust is required to carry out your wishes and recommend if appropriate. A Trust is always an optional product in our planning, but there are circumstances where your wishes will require one – your Estate Planner will be able to discuss the use of Trusts with you, and help you decide whether you would like to include the generational protections a Trust can offer.
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