Lifetime Discretionary Trusts

Protect your assets and your loved ones  now with a Lifetime Trust.

Like many people, you might have a niggling feeling in the back of your mind that you need to get around to making your Will, so that your assets are protected and passed on as you intended after you have died.

However, we consider the potential problems of waiting for an event that might happen in many decades time, when you can protect your assets right now.

How Goodwills can help you with a Lifetime Family Asset Protection Trust

Goodwills can help you protect your assets and your beneficiaries now by creating a Lifetime Family Asset Preservation Trust. Your assets can then be transferred to the trust, and they can then be ringfenced for up to 125 years! You can gift cash, investments and property into the trust. If you are a couple, your assets can go into a trust together, or separate trusts can be created, with different beneficiaries and trustees. The amount you gift can trigger an inheritance liability, however Goodwills staff are trained to give you information regarding how to avoid this.

Accessing the Assets in the Lifetime Trust

As the Settlor (the person who creates a Trust, and a Trust can have multiple Settlors) you no longer own the assets that you put into the trust, and instead the assets are managed by Trustees that you appoint. The settlors can be Trustees, so you can be a Trustee yourself,  and the beneficiaries can be Trustees too. As the settlor, you have the power to take assets back out of the Lifetime Trust for your own use should you require.

Avoiding Probate with the Lifetime Family Asset Preservation Trust

By putting assets into the Lifetime Family Asset Preservation Trust, you remove them from probate, your estate and the need to include them in your Will. This doesn’t mean the assets won’t generate an Inheritance Tax liability though, as they still might, especially if you retain an interest in the Assets. Goodwills can provide you with information on how to reduce any potential inheritance tax liability should you require it.  Your death does not stop the trustees being able to manage the assets or distribute the assets in accordance with your letter of wishes, and your assets will not get tied up in probate.

As probate fees are now based on the size of the estate, this can be a good way of reducing your probate costs, and if it means your assets are not tied up whilst probate is being administered then this could be advantageous to your beneficiaries too, especially as this could last for many months or even years in some circumstances.

Your letter of wishes means you can retain control

You can write a letter of wishes to keep with your trust document. This letter can provide guidance to the trustees on how and the assets might be distributed and under what circumstances they might be retained. One of the major benefits the Lifetime Trust provides is that grandchildren and great grandchildren (and so on) who aren’t even born yet, can be beneficiaries of the trust, and as beneficiaries get older, they can become Trustees as other trustees retire.  Your letter of wishes can indicate to the trustees who you might want to be included in the trustees’ thoughts when considering how the assets might be distributed, even if they are not yet born, or become a member of the family.

Protecting your assets from being removed from the family or causing harm to beneficiaries in certain situations

From the moment the trust is created, and the assets are gifted to the trust, they are protected. But you need to be careful, because putting assets into a trust to avoid a known cost such as care home fees after you have been diagnosed with an illness,  or bankruptcy after you have gone through a period of bad luck could result in the trust failing, and the assets being taken anyway. It is better to put the assets into the trust when all is well, not when times are bad.

Assets can be protected in the following scenarios:

  • Should your spouse remarry after your death, or even get divorced after they have remarried. Assets in the trust can be stopped from passing to the new spouse and their children.
  • Should another beneficiary get divorced or die whilst funds are still in the trust. If the funds had already passed to the beneficiary then they could form part of a divorce settlement, or form part of their estate and distributed in accordance with their Will, however this will not be the case whilst the funds are still in the trust.
  • Should a beneficiary fall on hard times, they will still be able to claim state aid and benefits as required, however if the money had been paid direct to them then it would be assessed in any income and capital calculations.
  • Should a beneficiary become an addict (such as drugs, gambling alcohol) or suffer a mental breakdown, it might not be a good idea to give them a large amount of capital. The trustees can control when and how assets are distributed to potential beneficiaries and manage situations, so the beneficiary is not put in a worse situation and the trust is protected for other beneficiaries.
  • If the assets were not placed into the trust to avoid care fees, and there was no reason at the time the assets were added to the trust that a settlor might need to go into care, then the trust capital will not usually be assessed when calculating and the asset and the trust was created for other valid reasons.

There are also other reasons where the trust can provide protection, however the reasons listed above are the most common.  If you are self employed then you can protect your assets against any liability created by the business, and if you are sued, then your assets could be protected whilst any settlement is calculated, are two good examples.

Setting up the Goodwills Lifetime Family Asset Preservation Trust

Goodwills can create the trust and set up the trust deed with the required trustees and named beneficiaries. The trust allows for more beneficiaries to be added and for trustees to be added and removed as required. We can also help with a letter of wishes which will assist the trustees when they make decisions.

Goodwills can even act as professional trustees if you would like us to. We can work alongside other trustees, to ensure impartiality, provide professional support and ensure that transactions are carried out in the most tax efficient way.

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