There are many benefits of Trusts.
The benefits of trusts can substantial. Here are some:
Probate Costs and Delays – one of the benefits of Trusts.
According to a solicitor contact, not only will Probate typically take between 6 and 12 months, but the costs are substantial. See below.
Estate: £100,000 Probate cost: £3,237.50.
Estate: £200,000 Probate cost: £5,587.50.
Estate: £300,000 Probate cost: £7,937.50.
Estate: £400,000 Probate cost: £9,112.50.
Estate: £500,000 Probate cost: £11,462.50.
One of the benefits of Trusts (ours, anyway) is the ability to strip away all or most of the Probate cost, and virtually all of the delays. Those trust benefits alone more than recovers the initial cost of the trust for most people.
2. Benefits of Trusts on Incapacity
The great benefit of trusts here is when one or more of the Trust beneficiaries (typically children, grandchildren or parents) are on benefits or unable to make their own decisions etc. The Trustees can arrange to look after them in ways which not mean the loss of benefits, or losing control of their inheritance to the Courts or Court Appointed Deputies of Social Services. Should one of your beneficiaries now or later fall into this category, would it not be great to know that their inheritance will be used to help them?
Under the Inheritance (Provision for Family and Dependents) Act 1975, it is possible for anyone who might reasonably consider that you should have left them something to make a claim through the Court. Typically this will be children, partners or ex partners, ex-spouses or anyone else who might consider that you were or should have been helping them financially.
Under the Act, that can happen after you have died, the only way to be pretty certain to avoid such issues to to take advantage of another of the benefits of Trusts. Simply transfer your assets into a special Trust far enough in advance to take them outside of your estate for the purposes of the act, and there will be little point in anyone claiming under the Act.
4. Sideways Disinheritance
Divorce, remarriage after your death of your spouse or any of your beneficiaries can lead to your wealth benefiting people who have nothing to do with your family. A decent inheritance into a rocky relationship can precipitate a divorce. With more money to grab, there will never be a better time for the unhappy partner to take the money and run!
If a partner starts another family, who will they leave their wealth to? Grown up children from the first relationship or the new spouse and young children? One of the benefits of Trusts is that you can be fair to those left behind, but still prevent them from moving the wealth outside the family.
5. Children Inheriting at the Wrong Time
We’ve already touched on some of these issues above. But children or grandchildren could be:
- Mentally incapable.
- Gamblers, drug addicts, bankrupt, likely to divorce.
- Too young to be responsible (many don’t get the idea until they are 30+)
- Easily influenced by others who may not have their interests at heart.
Another of the benefits of Trusts is that, with the appointment of the right Trustees and good instructions from you, your views can prevails for anything up to 125 years.
6. Childrens’ Inheritance Tax
With people commonly living into their 90’s and beyond, it is increasingly common for “children|” in their 60’s or even 70’s to inherit substantial sums. This raises two potential problems.
a) The recipients may be well off, in which case there is a great chance that 40% of whatever you leave them will be lost to their children by way of Inheritance Tax. And it might be the grandchildren or great grandchildren who actually need financial help. If the parents give it, that can cause more tax problems. One of the benefits of Trusts is that your trustees can use your wealth to the greatest possible benefit bearing in mind the guidance you have left behind.
b) If the recipients are not well off, then your wealth may prevent them from claiming benefits, or be taken by the Local Council to pay care fees in due course. With a Trust, the Trustees can look after such folk without being forced to lose the advantage of benefits or the Council paying basic care fees. So every penny will be used directly to help your chosen beneficiaries.
7. Care Costs
These sort of trusts are often sold exclusively to avoid Care Fees. This makes them wide open to challenge. With a little help from us, you will see a far wider range of benefits.
Hopefully we have demonstrated that the benefits of Trusts are FAR wider than that, so why not give us a call on 01323 741203? Or go here.
Contact us to discover the benefits of Trusts for your family.