We work hard during our lives to build up assets of value, sometimes receiving assets ourselves that have been passed on through our own families. What we hope is that we too can pass these assets on to help our families.
What happens if the people we want to benefit from our assets are too young or inexperienced to properly manage and preserve the assets or their personal circumstances are such that the assets could be lost through divorce, bankruptcy, substance abuse, mental health issues or simply squandering the assets through bad decision making? What happens to assets left to vulnerable beneficiaries who may be susceptible to abuse from outside influences?
If money or property is given directly to beneficiaries who are not used to managing large amounts of money those assets may be lost or wasted. Trusts are often set up either during a person’s lifetime or on death to hold assets to be managed by trusted relatives, friends or professionals. Capital and/or income from the trust can be used to support the people you want to benefit at the right time and in the right way.
Trusts have a number of advantages when used in an appropriate way with the proper advice:
- Potential inheritance tax savings.
- Protecting assets from being lost following a second marriage.
- Protecting assets from being lost in the event that a beneficiary should go through a divorce or bankruptcy.
- Helping to avoid and/or simplify the probate process when you die for those assets held in the trust saving time and expense.
- Make sure your loved ones benefit at the right time for them.
- Provide protection against issues associated with funding long term care home fees.
- Protect assets from being squandered by beneficiaries.
- Advise on whether a trust may be appropriate for you.
- Advise on the best people to act as trustees of the trust.
- Advise on who you can include as beneficiaries of the trust.
- Draft trust documents and complete the formalities to transfer assets to your trustees.
- Record your wishes and guidance to your trustees to advise them on how you would like them to manage the trust after your death.
- Review existing trust arrangements to ensure they comply with financial and trust-related legal requirements.