In essence, ownership of the item passes from you to the Trust. The Trust is a bit like a safety deposit box and is managed by ‘Trustees’ (a minimum of 2 people). The Trustees make decisions about how the Trusts assets are used, following your written instructions.
The Beneficiaries of the Trust are the people who can benefit from the Trusts assets. It is possible to be a Trustee(s) and also a Beneficiary.
If you own a house and you put your house into a Trust then this would give your home a high level of protection, to ensure that it passes on to exactly who you wish, when you would want it to and in the way that you would want it to.
When you pass away your spouse and/or children would be beneficiaries of the trust. Which would mean they would be able to live in the house without needing to own it. If your spouse re-marries and then passes away your house does not pass in ownership to the new spouse, it does not become part of their estate. When your children become beneficiaries they would not need to pay 40% inheritance tax on the house, often leading to the property being sold to cover costs.
If one of you child inherits from your estate while they are in the middle of getting a divorce, then their ex could be entitled to 50% of their inheritance. If your estate is held a Trust, for your child’s benefit, then it is protected from this.
It is much more difficult to seize assets from a trust. Normally if you own a house and need to declare bankruptcy then you will lose your home in the process. If the home is held in a trust then it does not form part of your estate and is unlikely to be seized.
It does not have to be a house, it could be an expensive painting. If you have a family heirloom that every generation is expected to pay inheritance tax on to keep then it may make more sense to put the heirloom into a trust.
Putting your property into a Trust is a way to ensure your loved ones benefit, rather that the tax inspector.
We can go through the options with you, to make sure you choose the right Trust for your circumstances. Contact us today.
Clients tell me how relieved they feel once their estate planning is in place - it’s one less thing to worry about. So get in touch and don’t put it off any longer!
