Seven benefits of a Family Protection Trust
Posted 13th November 2018
Here are the seven main benefits of setting up a Family Protection Trust:
1) No Probate – probate can be a very lengthy process – in some cases up to a year,
and can cost thousands of pounds. With a Trust, there will be no probate required.
2) Family inheriting at the wrong time – If you only have a Will, it is very difficult to control when your family inherit. With a Trust, you can take full control over when your family inherit. A good example would be if you died and left your estate to your children, but your children were on state benefits on your death. Your children would lose their benefits once they inherited your estate. With a Trust, your Trustees can ensure that this does not happen.
3) Inheritance Tax – The current nil rate band is set at £325,000 for a single person, and £650,000 for a married couple (this is the amount that can be inherited before paying Inheritance Tax). Whilst there are a lot of people who do not have an inheritance tax liability, this can change once they inherit.
4) Inheritance Act Claims – despite what you have put down in your Will, under the 1975 Inheritance Act, your family have a right to put a claim in against your estate and the courts have the power to overrule your will. With a Trust in place, this is avoided.
5) Sideways Disinheritance – The easiest way to explain this would be if you were to leave everything to a child who then dies, but his surviving partner was to remarry, everything would end up going to the surviving partners new husband/wife. The likelihood is that your intended beneficiaries will miss out on inheriting. A Trust avoids this.
6) Incapacity – As we all age, it can be more and more difficult to manage our affairs. With a Trust in place, our Trustees can assist with this.
7) Care fees – 1 in 4 of us will go into care, and only around £15,000 of our estate is protected against care-home fess. Where you cannot set up a Trust to avoid paying care home fees, provided the Trust was set up at the right time, and for the right reasons listed above, it can potentially provide support with this.
When the time comes to wind up a Trust it can be done without any risk or delay.
Although you are the main Trustee, you will have the support of a professional Trust corporation whose responsibility it is to ensure that your wishes are carried out. This means that whilst you are alive you can put assets in, and take them out, but once you pass away you have the peace of mind to know that what you want to happen does.
A Family Protection Trust can be considered as a safety deposit box. This lifetime
Trust allows you place assets inside of it during your lifetime and the Trust will remain in your family for 125 years.
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