WHY USE A TRUST

trusts can be used for many different purposes. They can be used for tax efficiency , protecting your capital from many different areas, like inheritance tax long term care fees. They can ensure your capital or estate actually gets to the right people. They can be used to ensure your capital goes immediately to beneficiaries on your death without the need to go through the lengthy and expensive ritual of probate.

They have so many uses, so why are they rarely used ?

There are a few reasons for this, firstly financial advisers ( I am one by the way ) often avoid this area with their clients. For the adviser it is a highly complex area and requires a high level of knowledge and expertise. for this reason they often skip this area, quite often putting their clients in a disadvantageous position.

Secondly, because trusts are often used to legitimately avoid ( not evade ) certain taxes and revenue producing streams for the taxman they are not overly publicised by the authorities.

One of the most common uses of trusts is within the whole of life insurance policies. Most people have this type of policy in place to ensure a family member has the cash to pay for funeral costs and other associated expenses when they die. If the policy is not written in trust the beneficiary may have to wait several months whilst an estate clears probate and then pay probate costs on that portion of the estate, often leading to financial hardship. So if you ever put in place a life policy for that purpose, insist on it being placed into trust.

Quite often my clients leave money to their children, now we all hope that we will live to a ripe old age and see our children grow up and give us lots of lovely grandchildren. However ,sadly this does not always happen, we may pass when our children are still quite young. In this case would you really want your 18 year old to suddenly come into a large sum of money. With the best will in the world our teenage children may not yet be the wisest when it comes to sound financial wisdom, and your hard earned gift could well be spent on the mother of all parties for their mates. So why not be safe and place this inheritance into trust until they are a little older, say 25 or so when maybe they will be a little wiser and use the money for better purposes.

Trusts are often the best way to legitimately avoid many taxes, IHT , CGT and long term care costs.

For more information on trusts visit www.mcwillwriters.co.uk