Trusts - Discretionary and Lifetime

Discretionary and Lifetime Trusts

Helping you protect and distribute your assets
professional advisor explaining trust options

Valuable tools for Estate Planning

Establishing a Trust in your Will can be beneficial for lessening Inheritance Tax (IHT) and ensuring that children are not disinherited by changes to marital status, as well as helping to shelter assets from Local Authority calls for care fee payments later in life (see also our Property Protection Trust).
Trusts can be written to come into force immediately, or can be effected upon your death if written into your Will.  They can vary from being a simple clause in a Will that protects assets for a child until they reach a certain age, to a more complex Trust that cares for a disabled child who is unlikely to be able to manage their own affairs.
Below is a simplified explanation of two common Trust types – call us or book an appointment with one of our professionally trained advisors for a more detailed explanation that reflects your own circumstances.

Lifetime Interest Trusts

Just like the Property Protection Trust (PPT)  a Lifetime Interest Trust from Heritage (sometimes also called a Family Asset Protection Trust), effectively gives over ownership of specific assets to a Trust that you control and benefit from while you are alive (so you could receive interest and dividend payments for example, and buy or sell assets themselves).
If you die first, your partner could continue to benefit from the assets - in exactly the same way that they could continue to live in the family home under a PPT.  Upon their death, the Trust and its contents pass down to your chosen beneficiaries as you have stipulated.
illustration of how a lifetime interest trust can protect your family
40%
The standard inheritance tax rate for any assets above the IHT limit – including your property
young professional setting up a discretionary trust

Discretionary Trusts

Particularly helpful for unmarried couples who cannot benefit from any unused inheritance tax allowance upon the first partner’s death, a Discretionary Trust sees assets - including property – transferred and managed by trustees (who usually include any surviving spouse and other beneficiary) who decide how those assets are to be used and distributed.
Despite needing to pay inheritance tax on the first partner’s half of the estate, thousands of pounds can still be saved perfectly legally in this way, as both partners’ IHT allowances are maximised for the benefit of their chosen beneficiaries.
A Discretionary Trust is also a fantastic tool for avoiding sideways disinheritance and for providing for people with disabilities.
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Don’t let Inheritance Tax needlessly whittle away your estate – talk to us about Trusts
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