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The Will Writing Company
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Newport Pagnell
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Trusts
Safeguarding Your Legacy and Assets with Trusts
Trusts we offer:
Discretionary Trust.
Nil Rate Band Discretionary Trust.
Flexible Life Interest Trust.
Life Interest in Property or Right to Reside.
Protective Property Trust.
Business relief Trust.
Discretionary Trust Deed.
Bloodline Trust
A Bloodline Trust, also known as a discretionary trust, family protection trust, or wealth protection trust, serves the purpose of safeguarding family wealth and assets, ensuring they remain within the family unit. This trust is valuable in protecting capital from becoming part of divorce settlements involving family members or being subject to creditor claims in the event of a family member's bankruptcy.
Reasons to Establish a Bloodline Trust:
Safeguard the inheritance of your beneficiaries from marriage or remarriage.
Shield your beneficiaries' inheritance from potential dilution in the event of divorce.
Protect your beneficiaries' inheritance from creditors if they encounter financial difficulties.
Maintain a 'bloodline' inheritance for multiple generations, preventing the inheritance by son- or daughter-in-law.
Ensure that beneficiaries receiving state benefits are not adversely affected by the inheritance.
A Bloodline Trust, also known as a discretionary trust, family protection trust, or wealth protection trust, serves the purpose of safeguarding family wealth and assets, ensuring they remain within the family unit. This trust is valuable in protecting capital from becoming part of divorce settlements involving family members or being subject to creditor claims in the event of a family member's bankruptcy.
Business Trust Wills
While there are various reasons to create a Will, such as appointing executors, trustees, and guardians, and ensuring that the right individuals inherit your estate at an appropriate time, business owners often require a more comprehensive Business Will for several specific reasons:
Business Continuity: In some cases, a business must cease trading upon the owner's death. This can significantly impact the business's value, potentially resulting in minimal or no inheritance for your chosen beneficiaries.
Different Administrators: You may want to designate different individuals to oversee your business affairs compared to those handling your personal estate.
Inheritance Tax Efficiency: Businesses can be subject to Inheritance Tax if business assets or shareholdings are sold during the owner's lifetime or if tax relief changes between the first and second deaths. This could result in beneficiaries having to pay a substantial portion of their inheritance to the government.
To address these concerns, gifting your business or agricultural assets through your Will into a Business Trust allows the surviving spouse and children to utilise the assets during their lifetimes without being subjected to Inheritance Tax upon the survivor's eventual passing. This trust can be utilised alongside Cross Option Agreements and other tax or estate planning trusts in your Will.
Flexible List Interest Trust
A Life Interest Trust is established when a beneficiary is granted a lifetime interest in certain assets within an estate. Typically, this means the beneficiary is entitled to receive income generated by the trust for the duration of their life, while not having access to the capital held within the trust. The beneficiary with this interest is often referred to as the 'Life Tenant,' also known as the 'Principal Beneficiary.' Upon the Life Tenant's passing, the assets held in the trust are designated to pass to other beneficiaries as specified in the trust deed.
A Flexible Life Interest Trust grants the trustees the authority to allocate both trust income and, in many cases, trust capital to the Life Tenant. This type of trust may also allow the Life Tenant to reside in a property owned by the trust without paying rent. Additionally, it provides the trustees with the power to sell such a property and acquire an alternative one for the Life Tenant's use.
When the life interest in the trust begins immediately after the death of the individual who established the trust, it is known as an Immediate Post-Death Interest in Possession Trust (IPDI).
A Flexible Life Interest Trust offers legal safeguards for the Life Tenant against other beneficiaries of the trust, and vice versa. Furthermore, a Statement of Wishes can be employed to guide your trustees on how you prefer the trust's assets and income to be managed and distributed.
Disabled Minor or Vulnerable Beneficiary Trust
What is a disabled person’s trust?
Certain trusts established for disabled individuals can receive special tax treatment from HMRC. They are more commonly referred to as 'vulnerable beneficiary trusts.'
To qualify as a vulnerable beneficiary trust, specific conditions must be met.
Vulnerable beneficiary trusts for children are frequently established within a parent's will, but they can also be set up during one's lifetime.
Who is eligible for a vulnerable beneficiary trust?
The beneficiary of such a trust must be a disabled person. In this context, a disabled person is defined as someone who:
Due to a 'mental disorder,' as defined by the Mental Health Act 1983, is incapable of managing their property or affairs, OR
Qualifies under a 'benefits' test, meaning they:
Receive an increased allowance,
Receive attendance allowance,
Receive the care component of disability living allowance at the highest or middle rate, OR the mobility component of disability living allowance at the higher rate,
Receive personal independence payment,
Receive armed forces independence payment.
What constitutes a 'mental disorder'?
It's important to note that the term 'mental disorder' mentioned above has specific criteria. HMRC generally accepts certain conditions as a 'mental disorder' that qualifies an individual, making them incapable of managing their affairs. The accepted conditions include:
Alzheimer’s or other forms of dementia,
Bipolar disorder, schizophrenia, depression, or other mental illnesses,
Autistic Spectrum Disorder (sometimes referred to as a pervasive developmental disorder),
A learning disability, such as Down’s Syndrome.
Certain brain injuries may not be considered a mental disorder if they only result in physical consequences. However, if a brain injury leads to a psychological, cognitive, or behavioral disorder, it is typically accepted as a 'mental disorder.'
What about other beneficiaries?
If there are beneficiaries in the trust who are not considered vulnerable, the assets and income designated for the vulnerable beneficiary must be clearly identified and kept separate. These funds should only be used for the benefit of that specific individual. It is only this portion of the trust that qualifies for special tax treatment.
If you're interested in learning more about these types of trusts and would like to schedule an appointment, please book a consultation with one of our advisors.
