Will Trusts

Will Trusts can balance competing interests, minimise disputes and avoid unnecessary distress and financial hardship for your loved ones.

Specialising in Will trusts, Alex Truesdale Wills Limited is a professional Will writing and estate planning service based in Cobham, Surrey and serving clients throughout Greater London including Claygate, Virginia Water, Kew, Hampton and the Richmond areas.

Call: 07887 946557 to discuss any queries you have with Will trusts or any estate planning needs.

Will Trusts Information

Will Trusts can balance competing interests, minimise disputes and avoid unnecessary distress and financial hardship for your loved ones.

Call: 07887 946557 to discuss any queries you have with Will trusts or any estate planning needs.

Will Trusts

If you are considering setting up a trust it is important that you understand the choices available to you, the consequences for your estate and the implications for those you leave behind. In the course of our work for you, we will determine the optimum Will structure to fulfil your objectives, which may include one or more Will trusts. In certain circumstances, we may also recommend that you consider setting up one or more lifetime trusts.

Each type of trust has different rules regarding who can benefit and when and is treated very differently in terms of the flexibility and control it provides and the way it is taxed.

What is a Trust?

A trust is the formal transfer of property to a small group of people known as trustees to hold and safeguard for the benefit of others.

Where the property is money or a collection of assets, it is usually referred to as a trust fund. Trusts can be created during your lifetime or set up in your Will to come into existence after your death.

Parties to a Trust

There are three main parties involved within a trust:

ο Settlor: The person who establishes the trust by a transfer of assets. This can be done during lifetime through a trust deed, or on death via a Will.

ο Trustee: The person entrusted to hold the assets for the beneficiaries. For practical reasons, there is usually more than one.

ο Beneficiary: The person entitled to benefit from the trust.

Why Create a Trust?

Trusts are used for a number of reasons. Whilst inheritance tax planning is a common reason for gifting some of your wealth into a trust, an outright gift to an individual would achieve the same inheritance tax benefit and so there are clearly other reasons to be considered. These typically include:

Trust Powers

Trust powers specify what your trustees can, or must, do and are set out in the Will or trust deed.

They can be as wide as you wish, but be careful to make sure that what you ask is legally possible.

If it transpires that the trustees cannot do as you ask, then they may have to apply to the court for directions, which will involve spending trust money on legal fees and may delay the use of the trust fund for the trustees’ benefit.

Protection

If you feel that an outright gift may not be spent in a sensible way, it is possible to hold monies in trust for a specified purpose – such as university fees or the purchase of a property.

This enables the gift to be made for the benefit of the person without them having the ability to spend the money on something more frivolous.

Flexibility

Depending on the terms of the trust, the trustees may have the flexibility to make a payment (distribution) on an ad-hoc basis to one or more beneficiaries depending on need.

Depending on your circumstances, you may decide to use a trust for many reasons:

In “blended families” to provide for a surviving spouse or partner who is not the parent of your child.
To create a life interest in a property.
To hold property for children.
To hold a business, or the shares in a company, for the benefit of a class of people who might be different from the directors or managers.

Alex Truesdale Wills Limited offers a professional Will drafting and estate planning service covering the Surrey, Kent, Greater London areas, the South Coast of England and Wales.

Call us on 07887 946557 or request a call back here.

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How does a Trust Work?

A trust is a legal arrangement where a company or one or more individual people (called trustees) controls money or assets used for the benefit of one or more people (the beneficiaries).

Trust Powers

Trust powers specify what your trustees can, or must, do and are set out in the Will or trust deed.

They can be as wide as you wish, but be careful to make sure that what you ask is legally possible.

Letters Of Wishes

Letters of Wishes provide guidance to trustees as to the settlor’s intentions in setting up a trust, and the use of the trust fund.

They must not attempt to bind discretionary trustees. However, they are very powerful documents as they provide the best indication of the settlor’s views on how to act in the beneficiaries’ best interests, which forms the heart of a trustee’s fiduciary duties toward those beneficiaries.

It is a brave trustee who departs from the terms of a Letter of Wishes without good reason; professional trustees are known to take a conservative approach.

Letters of Wishes need not be written in technical legal language and can speak “from the settlor”.

Trustee meetings

Trustee meetings are held on a regular basis to discuss the investments the trust has made, the distributions it is to make, the needs of its beneficiaries and whether the time has come to wind up the trust.

Trustees make distributions by deed and must keep minutes of their meetings. In some circumstances, a tax return must be completed.

These are all matters for which professional assistance may be required, the fees for which are payable out of the trust fund.

Types of Trust

There is a number of different types of trusts, each of which has a different financial and tax consequences.

Bare trusts

A bare trust is one of the simplest forms of trust. This is an arrangement normally used to look after funds given either in life or under a Will to a child under the age of 18.

Once the child reaches the age of 18 they become entitled to look after the assets themselves and the trust comes to an end.

Discretionary trusts

The main characteristic of a discretionary trust is that none of the people who may benefit from the trust has any entitlement to receive anything from the trust.

Trustees hold all of the property and money in the trust for a specified group of people and have wide discretion as to how and when money is paid out to each individual.

For inheritance tax purposes any payment to a beneficiary may be subject to an ‘exit charge’ based on the value that is being transferred out of the trust.

On every tenth anniversary of the set up of the trust, there may also be a periodic charge on the value of the trust fund which exceeds the nil rate band at that time. The maximum rate of tax is 6%. Trusts tax rules are complex and professional advice is recommended.

Trusts affected by the Finance Act 2006

The Finance Act 2006 changed the way that Accumulation and Maintenance (A&M) and Interest In Possession (IIP) trusts are taxed and as a result, these trusts have become less common.

Trustees of existing A&M and IIP trusts which contain, or may at some point in the future contain, assets worth more than the nil rate band should obtain further legal advice.

The taxation of “old” A&M and IIP trusts from 6 April 2008 will depend on when the beneficiaries become entitled.

Accumulation and maintenance trusts

Accumulation and maintenance (A&M) trusts are a specific type of discretionary trust which was often used to benefit the children or grandchildren of the person creating the trust.

The trust is designed to hold assets on behalf of individuals who were under the age of 25 when the trust was created. Each person who is entitled to benefit must be given a right to receive either the capital or the income from their allocated share of the trust assets once they reach the age of 25.

Interest in possession trusts (“IIP trusts”)

An interest in possession trust (“IIP trust”) is also known as a life interest trust and is characterised by a specified individual, known as the “life tenant”, being entitled to either some or all of the income produced by the assets in the trust and/or to the use of trust assets. For example the life tenant is entitled to live in a property owned (or part owned) by the trust for their lifetime.

Following the death of the life tenant, the trust assets are usually allocated to other individuals, the “ultimate beneficiaries” or “remaindermen” who will be named in the trust instrument, or alternatively, could be held on another life interest trust.

Trusts favoured by the Finance Act 2006

The Finance Act 2006 created a number of new ‘tax favoured’ trusts.

From 6 April 2008 any trust which does not fall within one of the exceptions below will be taxed as if it were a discretionary trust:

Immediate post-death interests (“IPDI”)

Immediate post-death interest (“IPDI”) trusts can only be created within a Will and are treated as IIP trusts.

This means that you can make a Will leaving your estate upon trust for a named individual, such as your spouse or child, for that individual’s lifetime, and that trust will not be taxed like a discretionary trust, but like an IIP trust.

Bereaved minor's trusts

Like an IPDI, a bereaved minor’s trust is a form of trust set up with a Will. To qualify it must be created for the benefit of the children of the deceased.

Income generated within a bereaved minor’s trust can be retained within the trust or paid out for the benefit of the child.

All of the capital within a bereaved minor’s trust must be paid to the child or children when they reach the age of 18.

Age 18-25 trusts

An Age 18-25 trust is a trust for the benefit of a person under the age of 25 which is established under the Will of a deceased parent.

It is similar to a bereaved minor’s trust but the trustees are not obliged to pay the capital to the children until they attain a specified age of up to 25.

However, there may be an inheritance tax charge on any capital transferred out to the children at any time between the ages of 18 and 25 and when it is paid out at 25, equivalent to 0.6% per year between the date of death and the date on which the capital is paid. Trustees should therefore consider under what circumstances it would be appropriate to pay out capital to children at 18, giving consideration to the maturity of each child at that point.

Disabled beneficiaries' trusts

A disabled beneficiary’s trust is a form of discretionary trust for the benefit of someone who has a qualifying physical or mental disability. There are a number of specific rules and requirements to be met for a trust to qualify as a disabled beneficiary’s trust. Professional advice should therefore be sought when setting up and administering such a trust.

Client Testimonials

“Very clear explanation of what the options and implications were for us. It was also good to have someone focused on the end result we had to get to, as it’s very easy on your own to leave to another day.”

EM, September 2018

“We would like to thank you for your professional help in getting us to a point of having signed Wills after many years of procrastination. Not only that your advice gave us the impetus to arrange a Civil Partnership and we now feel that we have got at least some of our affairs in order in these worrying times.”

KB, September 2020

“After many years putting off writing my Will I finally entrusted Alex Truesdale with the task of compiling it for me and my family. My main wish was to pass my estate on to my son, and have guardianship put in place, should the worst happen before he came of age. Alex guided us through the difficult and emotional process with the utmost professionalism and put us at ease from the outset. She was able to address all of the issues we put to her and brought up many we had not considered regarding our estate.
“As we were about to travel abroad, we were also on a very tight schedule for the wills to be drawn up and signed. Alex went above and beyond to make sure everything was in place for us in the allotted time, even to the point of being personally on hand to instruct ourselves and our witnesses during the signing procedure.
“In using Alex Truesdale Wills, we now feel totally secure if the worst should happen our affairs are in order. We will be continuing to draw on her knowledge as and when our wills need updating in the future and are delighted to recommend her first class service.”

BW, May 2018

“I have known Alex Truesdale for over 6 years, during which time she prepared Wills and Lasting Powers of Attorney for my sisters and assisted us in the administration of my sister Elizabeth’s estate after her death in 2018. I testify to her attention to detail, her knowledge and experience in her work and the warmth of her communications whether by letter, by telephone or in person. She responds to us quickly and we have full confidence in what she does on our behalf and on her advice on various aspects. She has a good network of people when particular advice is needed beyond her field of expertise or training. She became a friend to us as a family. I gladly recommend her services to others.”

KH, July 2020

“Thank you again for helping me sort out all our Wills and the funeral plan for my godmother. I cannot believe how timely that was bearing in mind today’s situation. Only good news from her care home so far, but to know that resources are there to help the staff directly if the worst happens certainly gives me peace of mind.”

SC , May 2020

“The support Alex gave me and my husband after our Wills and LPAs were finalised was second to none especially as he was diagnosed with a terminal illness a few months later. This ongoing support, advice and bringing in other specialists to assist was outstanding and I felt that we were in very good hands and would continue to be when the inevitable happened.
After my husband died, the comfort of knowing all was in order with the Wills was a great relief and her help in the immediate aftermath was much appreciated. It wasn’t just the professionalism but the genuine concern for my situation and that of the family. Alex then continued to guide me through the process and through some pretty complicated issues relating to the estate administration. She always responded to my copious emails and phone calls with clarity, efficiency and care.
The whole process was dealt with in a timely manner and to a very high standard and I felt that I was being looked after like one of her own family.
I can’t recommend Alex highly enough – a very talented professional dedicated to her work with a heart of gold.”

JD, July 2020

“Alex arranged an appointment for my husband and I to update our Wills in view of a change in family circumstances. She was organised, efficient and extremely sensitive to our needs. We discussed advance directives and lasting powers of attorney in-depth – things we had only considered in vague terms previously but realised how intelligent it was to sort them out early.
“I cannot fault Alex’s professionalism and caring attitude, and will be recommending her service to my friends and colleagues.”

SM, September 2019

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Will Writing And Estate Planning From Alex Truesdale Wills

Alex Truesdale Wills Limited offers a professional and personal Will writing service, giving you flexibility and control for the present and your loved one’s peace of mind about the future.

Contact Alex Truesdale today to arrange a free, no-obligation initial consultation, virtual meetings or face to face.