Will based trusts

Protecting family inheritance

Is a Will Based Trust right for me?

In simple terms a trust is a means of giving someone else a benefit of something but without actually giving it to them so it is kept safe. This could be giving your spouse a right to live in your property but ultimately making sure it passes to your children.

There are a variety of will based trusts available to protect your hard-earned assets. Whether your goal is protection for your family (or even from your family!), from external threats, or tax mitigation, there’s a suitable trust for you. You can trust in Nene Legal to advise you whether a trust is right for you.

What can Nene Legal provide?

We can include any or all of the following trusts in your Will ready to be set up at probate. These can be included in a single will or mirror wills:

Personal Protection Trust

This type of trust will help you protect your family home, or other property like buy-to-lets.

We will include this in your Will to make sure your spouse or other chosen beneficiary can continue to occupy it or receive an income from it, all while safely protecting it from threats. It can protect your share of the property from:

  • Sideways disinheritance – The property passing to a new spouse or step children
  • Care home assessment of the survivor
  • Bankruptcy of the survivor
  • Divorce

It can also be limited to simply giving a person a right to live in your property after your death for a short time. This is known as a ‘Right to Occupy Trust’.

See our PPT page for more information or contact one of our Consultant’s to see how the Property Protection Trust can benefit you.

Discretionary Trust

Discretionary trusts are incredibly flexible.

They have many benefits both for protection and inheritance tax (IHT) planning. In simple terms they work by leaving assets in the control of your Trustees. You name a group of people, and this can be anyone, who you would like to benefit from your assets. As the Trustees have control, they will decide who benefits, how much, and how often. For example, they may decide to give one of your children £10,000 towards their first home, and another £15,000 to start their business.

These trusts also protect from all of the threats mentioned above. There is also the added benefit of keeping the assets outside of your beneficiaries’ estates so no tax liability is created for them.

We recommend you give your Trustees some guidance on how you want them to manage the trust. This can be done in the form of a ‘Letter of Wishes’, which we can advise on and produce for you. The Trustees should try to follow this letter as closely as they can. You can update these wishes at any time without needing to rewrite your will, so don’t worry if you change your mind.

Vulnerable Person’s Trust

If you have a child or someone else you want to provide for who is disabled in some way you may be worried about how you can ensure their needs are met in the most effective way after you are gone. Leaving something to them directly can cause problems if they are in receipt of means tested benefits, or if they aren’t mentally capable of managing an inheritance themselves. The Vulnerable Person’s Trust is there for you in this situation.

It works similarly to the Discretionary Trust with one key difference; the fund MUST be used for the benefit of the vulnerable person.

For this trust to be appropriate the vulnerable beneficiary must meet some strict criteria set out by statute. At Nene Legal we can work with you can make sure that this type of trust is appropriate and confirm whether your loved one will qualify. We’ll confidently advise you on the benefits of this trust and make sure the necessary wording is included in your Will.

Flexible Life Interest Trust

As the name suggests, this is THE most flexible variety of trust we can include in your Will. This trust combines many of the benefits of the Property Protection Trust with those of the Discretionary Trust.

It offers great protection for your spouse and your children, and even generations going forward as it can last for up to 125 years. That’s 125 years that your assets can potentially be protected for, for the benefit of your loved ones and their descendants.

This trust protects your estate for your spouse for the rest of their life, and then carries on protecting your estate for your descendants going forward. Your estate can be kept safe from sideways disinheritance, creditors, care fees and more all while flexibly providing for your family.

There are also various Inheritance Tax benefits of the FLIT which we can advise on once we know more about your own finances and circumstances.

Any trust and Inheritance Tax planning we do for you at Nene Legal must be bespoke to you and your estate. There’s no ‘one size fits all’ when it comes to estate planning so please get in touch with us for a chat about how these trusts can help you.

Speak to our specialist team

We fully understand that although we try and cover as much as we can on our website.
There may be questions that we have not covered, if so feel free to
call our trained staff on 01933 588 990.

Protecting family Inheritance

Will trusts allow you to pass on your property within a trust structure – which can have a significant impact on your estate.

A will trust – also known as a testamentary trust – is created within your will to allow you to protect property you hope to pass on to your family.

Will trusts are mainly used by married couples and civil partners and are set up in conjunction with splitting ownership of the family home, to ‘tenants in common’, so each partner has 50%. Rather than leaving this to each other, they leave it to a trust, which comes into being on the death of the first partner.

Until recently, nil-rate band will trusts were a common way of saving inheritance tax (IHT). A couple potentially liable could split their estate into halves, both below the nil-rate band.

However, since 2007 the ability to transfer unused IHT allowance ended the need to make this type of will trust for most couples, although they still ring fence assets against potential fees should you or your partner go into long-term care.

Another reason for setting up a will trust is to avoid ‘sideways disinheritance’. This occurs when the first partner dies, leaving children from the marriage who might reasonably expect to inherit some of the family estate in due course.

If the surviving partner remarries and fails to make provision for their children in a new will, there’s a risk that everything will go to their new spouse instead.

A will trust uses up some or all of the first partner’s IHT nil-rate band in a way that leaving everything to your partner doesn’t. It could also create a capital gains tax (CGT) liability for trustees.

Will trusts are mainly used by married couples and civil partners and are set up in conjunction with splitting ownership of the family home, to ‘tenants in common’, so each partner has 50%. Rather than leaving this to each other, they leave it to a trust, which comes into being on the death of the first partner.

Until recently, nil-rate band will trusts were a common way of saving inheritance tax (IHT). A couple potentially liable could split their estate into halves, both below the nil-rate band.

However, since 2007 the ability to transfer unused IHT allowance ended the need to make this type of will trust for most couples, although they still ring fence assets against potential fees should you or your partner go into long-term care.