Most people appreciate that making a Will to pass your assets to your loved ones is crucial – but how do you know you've got the right one in place? You may need to consider more sophisticated asset protection or tax planning to ensure that your assets aren’t exposed unnecessarily to tax, care costs, divorce settlements or even the remarriage of your spouse or partner.
A nil rate band trust on first death - If you are married or in a civil partnership, a nil rate band trust can ring-fence £325,000 from the possible bankruptcy, remarriage or care costs of your surviving spouse or partner; it offers both asset protection and potential inheritance tax savings, and usually ends on second death. It is also possible to structure the trust to minimise any costs involved in managing it.
Discretionary trust of residue - If any of your family members are vulnerable or you’re concerned about your children’s relationships, a trust that provides your executors with discretion as to how and when to distribute your estate could be very useful. A discretionary trust can be invaluable in terms of ensuring your assets pass down your blood line or remain available to benefit the people you want to support.
Life interest trust for your spouse or civil partner – If you are part of a ‘blended’ family and in a second relationship, you may wish to ultimately pass your assets to your own children on second death; a trust for your new spouse or partner can provide the security they need, whilst ensuring the underlying capital passes to your children in a tax efficient manner.
Whether your estate is above the threshold for inheritance tax or you are simply looking to protect your assets, you should consider including appropriate trusts in your Will to achieve your aims.
And given the changes in legislation in recent years, you should certainly be considering reviewing your Will.
Contact Camilla or any member of our Private Client team if you need to know how best to protect your assets for future generations.