What Is A Will Trust? Will Trusts Explained

What is a Will trust? This question often arises when homeowners in the UK begin exploring Estate Planning options.

A Will trust is an instrument that comes into effect upon your passing away and provides more control over how your possessions are shared out whilst giving protection to your loved ones.

In this post, we’ll delve deeper into what exactly a Will trust is, its various types including bare trusts, fixed-interest contingent trusts, life-interest trusts and discretionary trusts along with their advantages and potential scenarios where they might be best suited for you.

If you’re keen to safeguard your resources and make sure your family is provided for after you’ve passed away – keep reading!

The Basics of Will Trusts

In simple terms, a Will trust allows you to dictate how your wealth should be managed and distributed when you’re no longer around. It’s like having a remote control for your assets from beyond the grave.

Why Should You Care?

You’ve worked hard for what you own – why let fate decide where it goes after your demise? With proper planning using Will trusts, we help ensure that everything ends up exactly where YOU want them to go whilst protecting your loved ones.

The Significance Of A Will Trust

This isn’t about playing favourites or controlling from six feet under; this is about making sure that those who depend on us aren’t left high and dry when we’re gone. That’s why understanding different types of trusts becomes so important when it comes to Estate Planning.

Selecting The Right Trustees: An Important Step

Your chosen trustees have quite the job ahead – they’ll need to manage these assets according to YOUR wishes until they’re transferred over completely. So, it is important to make sure you have chosen a person or people who are happy to take on this role. In most Wills, the Trustees are the Executors.

Different Types of Trusts For Different Needs

• Bare trusts are standard trusts contained within every Will.
• A fixed-interest contingent trust can be used if specific age criteria must be met before inheritance.
• If lifetime use is required, then life-interest trusts come into play.
• Last but not least, discretionary trusts offer flexibility with beneficiaries based on their needs or timing preferences without compromising financial security.

Setting up a Bare Trust

Bare trusts are simple yet effective and appear in every Will. A bare trust is when you leave your assets to your Executors, to manage and look after, until they transfer them to your chosen beneficiaries. These bare trusts appear usually under the Residual Estate Distribution – where you confirm who should receive your Estate after you have passed away.

Fixed-Interest Contingent Trusts Explained

If you have a minor beneficiary in your will, the fixed-interest contingent trust is your best option.

This type of trust allows you to determine at what age they should receive their inheritance. It’s not just about handing over the keys when they turn 18.

Essentially, you can choose to set the age at which beneficiaries access their inheritance higher than 18 if desired. You establish the trust with specific instructions for when and how the beneficiaries can access their inheritance.

The key point here is that you have the choice to set an age higher than 18 if you believe it is more suitable for them to handle such responsibility.

If you are setting up a trust for your own children, it is known as a Bereaved Minor’s Trust BUT only when you stipulate that your children should receive their inheritance before the age of 25.

Life-Interest Trusts

You have wealth, and you desire to ensure it is utilised beneficially even after your passing. Enter the life-interest trust.

This type of Will trust is like a guardian angel for your loved ones, providing them with financial security during their lifetime.

A life-interest trust allows one person (the ‘life tenant’) access to the income or benefits from an asset during their lifetime. After they pass away, the remaining value goes to other beneficiaries. Usually, we create a Life Interest Trust over the main property in the Estate, especially for married couples.

Besides ensuring that your partner or spouse can continue living in your home without any worries about losing it, these trusts also help protect inheritance from potential threats such as divorce settlements or bankruptcy claims against beneficiaries.

In most cases, a life-interest trust keeps the capital intact while allowing the beneficiary to enjoy its fruits – quite literally if we’re talking about rental income from properties.

Discretionary Trusts

If you’re looking for a trust that offers flexibility without compromising on financial security, then discretionary trusts are your go-to.

This type of Will trust gives trustees the discretion to distribute funds among multiple beneficiaries based on their needs or timing preferences.

To set up this kind of arrangement, first off, choose reliable and trustworthy individuals as your trustees. They’ll be in charge of managing the assets and deciding how they should be distributed.