A Will trust, also known as a testamentary trust, is a legal arrangement established within a person's Will to manage and distribute their assets after their death. Will trusts play a significant role in estate planning offering flexibility, protection, and tax-saving benefits for beneficiaries.

Definition

A Will trust is a legal arrangement established within a person's Will to manage and distribute assets for the benefit of specific beneficiaries. It allows individuals to set aside assets, appoint trustees to manage those assets, and define how and when they should be distributed to beneficiaries.

Types of Will Trusts

Discretionary Trust: This type of trust provides the trustees with discretion over how and when to distribute assets to beneficiaries. It offers flexibility and can be particularly useful when beneficiaries are young or vulnerable.

Life Interest Trust: Also known as an Interest in Possession Trust, this trust grants a beneficiary the right to receive income from the trust assets for their lifetime, with the capital passing to other beneficiaries upon their death.

Protective Trust: Designed to protect beneficiaries’ assets from various risks, such as divorce, bankruptcy, or irresponsible spending. Trustees have the authority to safeguard assets and ensure they are used for the intended purposes.

Benefits of a Will Trust

Asset Protection: Will Trusts offer a level of protection for assets against unforeseen circumstances. They provide a structured framework for managing and distributing assets according to the settlor's wishes.

Tax Efficiency: Will Trusts can also be used to minimise inheritance tax liabilities by taking advantage of tax exemptions, reliefs, and allowances available.

Control and Flexibility: By establishing a Will Trust, individuals can retain a degree of control over how their assets are managed and distributed, even after their death. Trustees appointed in the trust deed are responsible for carrying out the settlor's instructions, providing peace of mind that assets will be handled according to their wishes.

A Will trust is a valuable estate planning tool that offers flexibility, protection, and tax-saving benefits. By incorporating a Will trust into your estate plan, you can ensure your assets are managed and distributed according to your wishes, providing for the financial security and well-being of your loved ones for generations to come.

We’re here to talk through the options with you, to help you discover the best tools to use in your estate plan, to give you peace of mind.

For more information or for a complimentary estate planning review, please don’t hesitate to get in touch with us. Call 0117 3636 212 or email office@haroldstephens.co.uk to arrange a relaxed chat with one of our advisers.