Wills and trusts are often seen as different, but have you heard of a Will trust? Will trusts can be useful for planning your estate, protecting what you own, and making sure it goes to the right people after you pass away.
However, they can be tricky, so it's important to understand how they work and what they can do for you and your estate. This article will give you an overview of Will trusts and discuss the important things to think about when making one. Whether you're setting up a trust to safeguard your assets or you're a beneficiary wanting to understand your rights better, this article will give you some helpful information about Will trusts.
What is a Will Trust?
A Will trust is a legal arrangement where your assets go into a trust when you die, as stated in your Will. A trustee, chosen by the person who made the trust (the settlor), manages the assets according to the trust's rules. Unlike other trusts that start when you're alive, a Will trust only starts after you die.
People make Will trusts for different reasons, like protecting assets, reducing taxes, or taking care of people who can't manage their money.
For example, you might create a Will trust to support your kids or grandkids after you die. The trustee looks after the assets until the kids reach a certain age or milestone, then they get the assets.
There are different types of Will trusts you can make, depending on:
Who the beneficiaries are and if they're under 18
If you want the trustee to decide what each beneficiary gets, or if you want to say exactly what they should get
How complicated your estate is and how the trust will affect other parts of it
Will trusts can be complicated, so it's smart to get advice from professionals like Guy Williams at Infinity Later Life to make sure everything is done right.
Benefits of a Will Trust:
There are lots of good things about making a Will trust, such as:
Control: You can say exactly how your assets should be given out and managed after you die, which lets you keep more control over your stuff.
Protection: A Will trust can help keep the assets safe that are in the trust, especially if the beneficiaries can't handle their money or if there might be legal problems with the estate.
Privacy: Wills are public, but Will trusts can keep your business more private.
Tax savings: Depending on your situation, a Will trust might help you pay less tax on your estate by giving out assets in a tax-smart way.
Flexibility: You can design a Will trust to be flexible, so it can change if things in your life or your beneficiaries' lives change.
Will Trusts and Care Many couples use Will trusts to plan what happens to property they own together. If you own a home with your partner as tenants in common, you can leave your share of the home to the trust after one partner dies.
If you use a Will trust for your family home and your partner dies, you, as the surviving spouse, can keep living in the house and get money from selling it. If you need care, the local authority might only look at your share of the home's value for payment, not the part owned by the trust. This can protect your assets from care home costs.
Will Trusts and Tax Tax rules for Will trusts are complicated, and there are a few things to think about when making one:
Capital gains tax: Trustees might have to pay capital gains tax when they sell assets in the trust, and beneficiaries might have to pay tax when they get assets from the trust.
Income tax: Beneficiaries might have to pay income tax on any money the trust makes. If they don't automatically get the money, the trustees might have to pay more income tax.
Since Will trusts can be tricky with taxes, it's smart to get advice from experts in estate planning. They can help you set up the trust in a way that saves you the most tax and follows all the rules.
With the right help, Will trusts can give you peace of mind and keep your assets safe for the future. They're a good way to plan what happens to your stuff, protect your assets, and make sure your wishes are followed when you're no longer around.
Because Will trusts can be complex and involve legal and tax rules, it's crucial to get advice from professionals like Guy Williams at Infinity Later Life to make sure your trust is set up correctly and fits your needs. Reach out to our team today to learn more and schedule a free consultation - in person or on an online call.