There are two main reasons that people set up trusts: to reduce tax liability or to address a family matter.
The rules about trusts and taxation can be quite complex, depending on how the trust is set up, but for the majority of our trust clients one primary reason for setting up a trust is to reduce the amount of inheritance tax that will be payable on death. At present, the inheritance tax threshold is £325,000. Any amount above this level is taxed at 40%. With rising property values, this threshold is easily passed, so it is very worthwhile to make plans now in order to ensure your loved ones receive the maximum possible benefit from any bequest you make.
One of the best ways to reduce the amount of Inheritance Tax that will be payable on your estate is to create a trust within your lifetime. Any substantial assets you no longer need can be placed into this trust, effectively reducing your personal wealth and therefore limiting the amount of inheritance your loved ones will lose to tax. You could also use your will to create a discretionary trust to benefit your family.
Our team will help you to find the trust solution that will give your loved ones the greatest benefit from your assets by reducing the amount of inheritance tax payable on your estate.
There are a wide variety of reasons why people create trusts for members of their family. Below are some examples of how a trust could give you peace of mind and ensure the future of your family members or other loved ones.
You may wish to give a substantial gift to a child or grandchild, either within your lifetime or as part of your will, but be concerned that they are not old enough or responsible enough to handle a large gift or inheritance.
In this situation, we can help you to draw up a trust deed, or add a trust to your will, to hold the gift or inheritance. You can set the terms of the trust to ensure that the assets are used for the benefit of your child or grandchild, but will not be released until they are mature enough to handle the gift or inheritance responsibly.
If you have a child or other dependant who is mentally or physically disabled, or who does not have the capacity to manage their own financial affairs for some other reason, you may be concerned about they will cope in the event that you are no longer able to assist them.
In a situation like this, creating a trust to hold any assets you wish to pass to such a beneficiary can give you much needed peace of mind. We can help you to create a carefully worded trust document which will take account of the concerns you have regarding the beneficiary of the trust, so that their financial future is secured.
This approach has been recommended by MENCAP and our team are able to assist should you wish to make use of the Mencap Trust Company Limited. Find out more at the MENCAP website (link will open in a new window).
If you have an elderly dependant, for example a parent or other relative, whose continuing care is your responsibility, you may be concerned about provision for his/her care in the event that you become incapable of caring for him/her or die before he/she does.
Creating a trust to hold enough capital to fund your elderly dependant's continuing care could help alleviate your concerns. In the event of his/her death, the assets held by the trust could pass back to you, or to another beneficiary as you wish.
How Wills & Trusts can
help with Inheritance Tax Planning
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