When you have young children, it’s important to know that should the worst happen that they will be provided for after your death.
For this reason many people often set up a trust as part of their will. Although children can legally inherit their parents’ estate at the age of 18, many parents would not want them to have the responsibility of making financial decisions at such a young age. Setting up a trust is a good way of ensuring that assets will be protected on behalf of a child or children until they are mature enough to manage it themselves. Having a trust in place means that the money you are leaving to them can be managed properly on their behalf and in some trusts, a beneficiary can receive an income from the trust.
Some people may also put assets into trusts to reduce or eliminate the liability for inheritance tax on those assets. Other reasons for setting up trusts in a will include provision for a spouse while keeping the estate intact to be inherited at a later date by your children or to protect the family home from being sold to cover the costs of residential care. It’s possible to set up a trust and pay money into it on a regular basis during your lifetime. Legally, the money held in trust is considered as separate to your estate, which lowers the value of your estate when it comes to inheritance tax liabilities.
If you have young children and want to ensure that they are provided for in the future, the article on the Blaser Mills’ blog which covers wills, probate and Jane Austen illustrates exactly why it’s a good idea to think about setting up a trust.
In a trust there are three main people involved – the trustee, the settlor and the beneficiary. The settlor (usually the parent) places money, property and other assets into a trust and the trustee manages it until it is time for the contents of the trust to be handed onto the beneficiary (usually the settlor’s child).
All the details concerning a trust can be included in the drawing up of a will and as well as choosing executors for the will, a trustee and beneficiary will need to be named for the trust. Often an executor will also be named as a trustee. You may decide that you don’t want your children to have access to the trust as early as the age of 18, and it’s possible to choose a specific age at which the trust will be passed to your children.
As there are a number of different types of trust, if it is something you are considering adding into your will, it makes sense to seek advice from a solicitor before deciding which type of trust to set up.
Bio: Clare Wilson is a blogger and mum of two. After studying law at uni she is now doing a part-time Masters in the subject while also looking after her two daughters