Family Trusts

Over the past two or three decades the average family wealth has increased dramatically, this is mainly due to rising house prices but also due to good advice given to the public on savings and investments.

This family wealth cascading through the generations can present its problems, for example; an increasing inheritance tax liability, gifting to spend thrift beneficiaries, gifting to beneficiaries with anti social habits such as alcohol or drugs, gifting to young and immature beneficiaries who will squander such funds, or protecting your family wealth for your children and not those of your new partner or spouse.

We may need to ensure that we have made financial provision for vulnerable beneficiaries such as disabled persons, but we may have concerned that in making such provision our family wealth will be used by local authorities to pay for the beneficiaries care.

For these and many other reasons, Goodwills Ltd. have developed a host of specialist trusts thereby providing solutions for your problems. Many of these trusts are discretionary in nature thereby giving your trustees the power to make the financial decisions that you would have made had you survived.

Such trusts have protective properties that will prevent assets being wasted by beneficiaries but will provide for them throughout their life.

A brief explanation of each trust is listed below. For further information on how Goodwills Ltd can assist you in protecting your Family Wealth please contact us immediately.

Family Trust   {To Top}

The Family Trust is a discretionary trust that holds your entire estate upon your death. It is controlled by the trustees whom you appoint in your Will for the benefit of the persons you choose. The potential beneficiaries of the trust do not have an automatic right to any of the trust assets they have a mere hope that the trustees will give them income or capital from the trust. This trust is ideal if a beneficiary has an anti social habit or is likely to be a spend thrift, the trustees can regulate and even prevent funds passing to such a beneficiary. The trustees will be guided in their decisions by a letter of wishes prepared by you stating your intentions for the trust.

Family Trust - Inheritance Tax   {To Top}

The Family Trust can be used for inheritance tax mitigation through the generations. The Family Trust can exist for up to 80 years from your death. Due to its discretionary nature the assets within the Family Trust do not form part of the beneficiaries estates so therefore cannot be taxed up their death.

Example:
Mrs B has an estate worth £250,000. She dies and leaves it all to her son Jerry who already had an estate worth £200,000, which is now worth £450,000 (£200,000 + £250,000).

Jerry now has an inheritance tax liability on his death of £60,000 (£450,000-£300,000 nil rate band = £150,000x40% = £60,000)

If Mrs B had via her Will created a Family Trust in favour of Jerry and his family, then provided it was administered correctly there would be no inheritance tax to pay on Jerry's death.

Children's Protective Trust   {To Top}

The Children's Protective Trust is provided for clients with young children who upon their death wish to provide the children with the financial support they will need, but also wish to protect them from wasting funds from the estate.

The trust holds your entire estate upon your death and is discretionary in nature. The beneficiaries are your children and the trust will end when the youngest child has attained the age of 25. The trustees can advance income or capital to your children at any time, but they may withhold such payments if they think it will be wasted by the children or place the children in a position of harm. The trustees will be guided in their decisions by a letter of wishes prepared by you stating your intentions for the trust.

Remember, age and maturity don't go hand in hand!!!

Property Trust   {To Top}

If you own freehold or leasehold property you may wish to leave such property to your children when you die, but you may also wish to provide a home for your spouse, partner or loved one. If you give the property to your partner can you trust that they will leave it to your children when they eventually die? What happens if they remarry or write a Will giving the property to someone else?

Our property trust is drafted in your Will and upon your death it permits your partner to live in the property until they die. You can dictate that the trust will end sooner, eg. if your partner should marry. When the trust ends the property will pass to your children as you originally intended.

Our property trust ensures that your house, or your share of the house if you own it jointly with your partner, passes to your children but provides a home for your partner in the meantime.

Disabled Beneficiary Trust   {To Top}

When clients have a beneficiary who is mentally or physically disabled there is often a dilemma as to how much to leave to them and who will handle the funds. This can be complicated further by other potential beneficiaries having competing interests.

We must advise clients that they should leave adequate financial provision for a disabled beneficiary or have their estate suffer a potential claim made under the provisions of the Inheritance (Provision for Family and Dependants) Act 1975. The result of such a claim could be the court awarding payment to be made to the beneficiary (often under the protection of the Court of Protection) for their benefit.

Another concern faced by clients is that if they leave funds directly to the disabled beneficiary, such funds will be used to pay for the cost of the persons care, and/or deny the beneficiary certain DHSS benefits.

To solve such issues Goodwills Ltd have trusts designed to protect your family wealth from being used to pay for the cost of care, but which will allow payments of income and/or capital to be made for the benefit of the disabled person. These payments may improve the persons lifestyle in whatever way the trustees think fit.

Our trusts make use of the tax advantages provided by the Inland Revenue to trustees of trusts for Vulnerable Persons.