ℹ️ Wills come in all shapes and sizes
ℹ️ They can be basic, or they can contain one or more “trusts”
ℹ️ Many people think you need a large estate to have a trust – but that isn’t the case
Read on for more information about the types of Will you can have and why you may need a trust included in it.
Firstly, who, why and when?
Wills are not just for old, rich people !
Anyone who has a property, children or a business needs a Will. It’s the only way to make sure that what you want to happen to your family and your assets after you die is known to those you leave behind.
You should also update your Will when major life events happen …
- Having a baby, or having grandchildren
- Getting married, separated or divorced
- Buying a property
- Inheriting from others – or winning the lottery!
and yet more than 50% of UK adults don’t have a valid Will according to recent research
What is a Basic Will?
Basic Wills allow you to
- choose who you want to be your executors (the people who deal with your estate)
- appoint guardians for your children
- make provisions for continuing your business activities
- specify your wishes around funeral arrangements and organ donation
- make direct gifts of money or possessions to your chosen beneficiaries
Writing all this in your Will makes it much easier for those you leave behind to deal with your estate at a very stressful and emotional time.
What is a Trust Will? And how does it protect your inheritance?
A Will that includes a trust can give additional benefits by protecting the people you love and giving you greater control over what happens to the gifts you make in your Will. Your inheritance isn’t passed directly to your beneficiaries, but into a fund with trustees, appointed by you, who help manage and control the asset for the future.
Some examples are given below:
Leaving money directly to your children is a great gift, but because it is now part of their estate, it can be open to several threats, including:
- Divorce – it can be included in any future settlements
- Bankruptcy – it could be used to cover any debts
- Tax – depending on the size of their own estate it could take them over the limits for Inheritance Tax.
- Benefits – it would be included in any benefits assessments.
Passing an inheritance into a trust via your Will can remove some of these issues.
Families with children from previous relationships are much more common now. While a Basic Will leaves everything to your new spouse, and then your own children, it doesn’t guarantee that your gift will eventually get to them. Here’s why ….
- If your spouse inherits your estate and their Will leaves everything to their own children, your children won’t get any of your estate when your spouse dies!
- If your spouse remarries their Will is automatically revoked and the majority of their estate would go to their new partner.
- Your spouse can simply make a new Will and leave nothing to your children.
Including a trust can ensure that your assets are protected for your children.
If you own a property as a couple, the chances are you own it “jointly” – meaning each of you owns 100% of the property. So when one person dies, the property automatically transfers to the other person. That means you can’t leave your share to someone and when the second person dies, the whole property is left to their own beneficiaries.
An alternative is to make an agreement that each of you owns their own share and that share can be “willed” to your chosen beneficiaries. Your share is held on trust for those people when you die, and the other person has the right to occupy the property for life. Their share is then passed on to their chosen beneficiaries when they die.
Including this type of trust can ensure that your share is protected for your children and shields that share from any future care home assessments for your spouse. We call this a “Property Protection Trust” and if you choose this option, we include this type of trust in our Wills for just a small administration charge.
If you leave an inheritance for a child (or adult) with a disability or additional needs, this can be counted as an asset and taken into consideration for future means tested benefits.
Losing access to financial benefits can also mean they may not be entitled to other services they may really need as they can’t claim them.
They may not be able to manage their own financial affairs and so will need assistance in this too.
Leaving their inheritance to them in a Vulnerable Person’s Trust means the money is kept out of their estate and so not counted in any assessments. It also means your chosen trustees can help them manage the money for them so they can have access to the funds if required but in a way that it is controlled.
At Risk Adults
You may have beneficiaries who you feel are vulnerable and susceptible to alcohol or drug-related issues. Leaving any inheritance in a trust allows you to appoint trustees who can help them manage the money in the best way for their needs and situation.
The above are just a few reasons you may wish to consider leaving an inheritance in a trust. You certainly don’t need to be wealthy to include one in your own Will!