Why do I need a Discretionary Trust?
A Discretionary Trust protects family wealth for future generations while also providing for family members and beneficiaries protection against third party attacks. There are also many other reasons why people set up Discretionary Trusts:
- Individuals who are unsure of their exact wishes when making a Will If you are not sure how you would like your assets to be divided up when you are gone then don't worry - you are not alone. This is actually very common. Discretionary Trusts allow flexibility for this so that you can change your mind at any time.
- Individuals whose beneficiaries' welfare payments may be jeopardised by a lump sum gift If you were to directly leave assets to a family member it may complicate or jeopardise their means-tested benefits payments. Leaving them funds via a trust prevents this from happening.
- Individuals with beneficiaries at risk of bankruptcy If your beneficiary is bankrupt or at risk of bankruptcy, there is a risk that the value of the estate you leave to them will be passed directly to creditors.
- Individuals with beneficiaries going through a divorce or at risk of divorce Using a Discretionary Trust ensures that your beneficiary is not at risk of losing the assets you give them during divorce proceedings.
- Beneficiaries who are vulnerable or disabled Any beneficiaries who are unable to manage their own finances can be provided for with a Discretionary Trust so that their inheritance on benefits is not affected.
Protecting assets
Because the trustees you appoint will have total control over when to release a beneficiary's inheritance, it enables you to potentially leave assets to people who:
- Cannot manage their own affairs, perhaps because they are not old enough or they do not have the mental capacity
- Are in receipt of means tested benefits and would lose these benefits if they inherited a lump sum of money outright
- Are at risk of wasting their inheritance, perhaps because they have an addiction or mental illness
- Are in a relationship with someone that you feel may influence or exercise control over any inheritance if they received it outright
- Are financially irresponsible and poor with managing money
This is a huge advantage of a Discretionary Trust, as trustees can ensure the beneficiaries are looked after, but you can rest assured that the assets will not be squandered.
What is a Trust Will?
A trust is a legal structure which can be included as part of your Will and can offer increased asset protection for your loved ones. These types of Wills are called Trust Wills. We would always recommend that you consider the benefits of setting up a trust as part of your Will.
They are most commonly seen in the following circumstances:
- You wish to protect your estate against possible care fees in the future
- You have a spouse or partner but children from a previous relationship
- You wish to leave some of your estate to a vulnerable or disabled person
- Protect your beneficiaries from any third party attacks
How do Trust Wills work?
Usually, when making a Will, you name people that you would like to receive your estate when you die, known as your beneficiaries. However, there may be circumstances where you would prefer that your estate doesn't go directly to the beneficiaries when you die, but rather, that it is held on behalf of those beneficiaries in a particular way.
The people holding the assets on behalf of the beneficiaries are known as your trustees. Trustees are nominated in the Will to administer the trust on your behalf. For more information, please get in contact so that one of our legal specialists can discuss this with you.
Types of Trust Wills
We offer the following types of Trust Wills to assist in different circumstances:
- Property Protective Trust Will
- Life Interest Trust Will
- Discretionary Trust Will
