Setting up a trust can be a great way to protect your loved ones in case of unexpected issues. It usually involves one or more trustees managing the assets of beneficiaries. Here are five good reasons to set up a trust.
The Ability to Choose
There are several different trusts that can be used to suit a variety of situations. A bare trust, for example, is used for protecting beneficiaries until they reach 18. Specialists such as https://www.parachutelaw.co.uk/deed-of-assignment can help with the drafting of a Deed of Assignment which is a form of trust used by property owners to transfer a beneficial interest to another person or party.
Protect Vulnerable Family Members
Sometimes, due to age or disability, a person may not be able to manage their finances. A discretionary trust can then be put in place so that their assets are protected and can’t be used unwisely. There are also specialist capital gains, inheritance and income tax implications concerning trusts for vulnerable beneficiaries.
Be In Control
If you want a much younger family member to benefit from your estate when you die but are concerned that they may not be ready for this level of responsibility, a trust can be ideal. If you have a trust in place, you can be assured that things will be dealt with how you want when you are no longer around. For example, you can set up a trust so that any funds are only paid out when the beneficiary reaches 18 or 25 and the trustees will abide by your wishes for how you want any funds dealt with.
Enjoy the Flexibility
When you set up a trust, you may be convinced that you know exactly how you wish any funds to be distributed and when. As everyone knows, however, circumstances can change and what you want to do today may not be appropriate in 20 years’ time. If you have a discretionary trust in place, your trustees will have the power to decide when to distribute any wealth. It is also important to choose your trustees carefully as they will be the ones making the decisions when the time comes.
Consider Tax Implications
As with any financial decision, there will be tax implications to consider in the setting up of a trust. Always take financial planning advice as there will usually be inheritance tax and income tax to be considered.
