Why you should think about using a Trust to provide for your family and save tax

Posted 19th June 2019

Written by Clare Presley

There are many reasons that you might consider putting in place a Trust, either during your lifetime, or in your Will. A Trust can help you to:

  • Save Inheritance Tax, by keeping wealth outside your estate
  • Provide for your family, whilst maintaining some control
  • Protect inheritance from children’s possible future financial difficulties and marital breakdowns
  • Protect vulnerable beneficiaries, including young children
  • Provide for a spouse after death while protecting inheritance for your children if the surviving spouse remarries
  • Protect assets from possible future care home fees

A trust is a legal arrangement whereby assets are held by Trustees on behalf of a third person or persons (Beneficiaries).  The Trustees are under a legal duty to look after and manage the Trust for the Beneficiaries and it is therefore vital that suitable Trustees are chosen. You can set the rules as to how the Trust is managed and when the Beneficiaries receive money from the Trust, or you can let the Trustees use their discretion as to how much each Beneficiary receives and when.

As the person making the trust (the Settlor) no longer owns the assets then they are not included in their estate when they die, therefore potentially saving Inheritance Tax. Think of it as putting money that you do not need into a piggy bank for your family or other dependants. However, the rules relating to the taxation of trusts are complex – they come in all sorts of different shapes and sizes depending on their intended use. They could also create a tax bill straight away when setting it up. It is therefore essential that you seek professional advice to guide you through your options.

Everyone’s wishes, family circumstances, and motivations are different and there are many options available. Should you wish to consider setting up a trust to protect your family and your assets and save Inheritance Tax when you die then please contact us for specialist and tailored advice to suit you.

For more information contact Clare Presley on 01904 409071 or email clare.presley@newtons.co.uk