At Solomons Solicitors, our team are experts in writing Wills and creating trusts to protect your family and loved ones. Contact our team today to find out how we can help you.
What is a trust?
A trust is created during a settlor’s lifetime or in their Will. A settlor places assets under the legal ownership of trustees for the benefit of beneficiaries.
Many people think trusts are the preserve of the ultra-wealthy, but they can be a useful form of asset protection and estate planning, whatever your circumstances.
Why are trusts in Wills popular when estate planning?
Trusts in Wills are popular when estate planning as they give flexibility. If you leave your estate to named beneficiaries, they will inherit even if circumstances change after your Will was written. For example, if your Will leaves your estate equally between your children, this may not be the ideal arrangement if, at the date of your death, one of your children has been made bankrupt, or is getting divorced.
A trust in your Will gives your trustees the power to advance capital and income to named beneficiaries. The trustees can take into account each beneficiary's personal and financial circumstances and your views, expressed in a letter of wishes when deciding how to distribute the trust funds.
Trust terminology– the settlor, trustee and beneficiary
Trust terminology can be confusing, but there are three main ‘players’:
- The settlor is the trust creator and places the assets in the trust.
- The trustees are named individuals who manage the trust. Trustees can be family, friends or even professionals, such as private client solicitors. Trustees have to act according to trust law, and in the best interests of beneficiaries.
- The beneficiaries are those entitled to capital or income from the trust fund. Their shares can be fixed, or their entitlement can be discretionary to give flexibility in case family or financial circumstances change
Creating a discretionary trust in your Will
A Will solicitor can create a discretionary trust in your Will. They will talk to you about the class of beneficiaries. The beneficiaries could include your spouse or unmarried partner, your children, grandchildren, or close friends and charities.
Writing a letter of wishes
A trust should be accompanied by a letter of wishes. This is a private document by the settlor giving instructions to the trustees. For example, the letter of wishes could say the trustees should advance capital and income to your husband or wife to the exclusion of the other potential beneficiaries but that on your spouse’s death the trustees should exercise discretion and share the remaining trust monies between the other beneficiaries.
A letter of wishes is personal to you, so you may want to say that the trustees should pay for your grandchildren to be privately educated from the trust funds or say the trustees should not exercise discretion to give trust monies if your children are getting divorced as you don’t want your money to be passed to your child’s husband or wife as part of their divorce financial settlement. The letter of wishes can be updated at any time during your lifetime as and when circumstances change.
Speak to our Bournemouth-based Wills Lawyers today
Solomons Solicitors can help prepare your Will and trust with clear, easy to understand legal advice on your Will and trust options.