Trust Wills Explained
Trusts and trust funds sound daunting to the untrained ear.
The reality is in our experience there are very few types of trust that get used directly by individuals in the work we do for Niche Wills in London.
The principle reasons are when they are considering writing a will and also in respect of looking after the interests of their children.
In the summary below we attempt to explain the key differences. So you can make an informed choice or narrow down your search for an appropriate adviser.
Absolute (Bare) trust
An absolute trust holds the property in the trustee’s name but allows the beneficiary to take actual possession of both the income and trust property whenever they want. For example this type of trust might be used to pass gifts to children while you are still alive.
Accumulation and maintenance trust
An accumulation and maintenance trust is designed to pass money for the welfare of children whilst they are still minors. Any surplus income that is not used is added to the trust property, which it turn will pass the children once they reach 18. At this point the trust turns into what is technically known as an ‘interest in possession’ trust. The process is differs in Scotland, as, once a beneficiary reaches the age of 16, they could ask the trustees to part with the trust property.
Discretionary trust
The trustees of a discretionary trust are empowered to decide the amount of income or capital (if any) to pay to each of the beneficiaries as none has an automatic right to either.
Discretionary trusts therefore can be used as a way to pass on property while you’re still alive and whilst still maintaining some control over it through the terms of the trust deed.
Interest in possession trust
In an interest in possession trust the beneficiary has a legal right to all the trust’s income (after expenses have been deducted), but not to the actual property itself.
For example, you wish to set up an interest in possession trust in your will. It is for instance common to consider leaving the income from the trust property to your spouse or partner and the trust property to your children when your partner dies.
Mixed trust
A mixed trust may be ideal when one beneficiary of an accumulation and maintenance trust reaches 18 and others are still minors. In this instance part of the trust then becomes an interest in possession trust.
Whilst the above hopefully gives you and insight and flavour, it is fair to say that will writers, including Niche Wills, will provide you with the exact timing and method of using the trusts in their most effective way. It is worth spending time and seeking professional advice as it could have a profound impact on your legacy.
More information on trust Wills can be found by clicking here
This was helpful for me. I looked at trusts elsewhere on the net and there was billions of them. I appreciate you cutting to the chase.
What others take is helpful and the fact it is endorsed by you is reassuring.
I live in Croydon, Surrey and would appreciate a call. I will be completing the enquiry form after this.
Cheers.