Trusts have been used to protect people's assets since around 750BC, even earning a mention in Homer's Iliad. Roman Laws also had a well-developed concept of a trust create by a Will.
So, how can a Trust help you safeguard your assets today?
If, when someone dies, the value of their assets exceeds a certain threshold (the nil rate band), inheritance tax is payable on their estate at 40%.
It's also sometimes payable on gifts or transfers made during their lifetime. What’s more, in most cases, it is payable before any assets are distributed.
The basic nil rate band is £325,000 per person. From 6 April 2020, there is an additional Residential Nil Rate Band of £175,000, effectively giving an individual a £500,000 RNRB if they own a home.
Since October 2007, married couples and registered civil partners can effectively increase the threshold on their estate when the second partner dies, by as much as double (£650,000). With the advent of the residence nil rate band, further tax breaks are available. Their executors or personal representatives must transfer the first spouse or civil partner's unused nil rate band to the second spouse or civil partner when they die.
Very few clients want to pay tax to the treasury.
Even fewer would like to leave the burden of inheritance tax to their children or other beneficiaries.
The good news is there a diverse range of planning options available.
By carefully organising your assets, and without having to lock them so tightly you cannot access them, we can minimise or even completely avoid any inheritance tax due on your estate.
A common and legal way to help avoid this is through the use of trusts. We are specialists in advising and then arranging for the setting up of trusts to fulfil an individual's requirements and their wishes for their beneficiaries.
A trust can take effect only when you die, and / or it can protect your assets while you are alive. Usually our clients want to protect their assets from inheritance tax or from other negative situations, some of which are listed below.
Our asset protection trust can solve many legal problems commonly encountered by our clients. For example, it can potentially: protect against a beneficiary inheriting at a potentially inconvenient time, such as during a divorce or bankruptcy; remove the need for probate: assets held within a trust are not subject to the costly and time-consuming probate procedure; avoid creating an inheritance tax burden for your children or other chosen beneficiaries; help to avoid a child or other relative making a claim under the Inheritance Act 1975; ensure family members are not disinherited against their wishes (for example if your spouse or partner remarries).
There are many different types of trust, so we select and tailor them so they're exactly right for you and your family. They include Nil Rate Band Discretionary Will Trusts; Property Protection Trusts; Asset Protection Trusts; Flexible Life Interest Trusts; Spousal Bypass Trusts; Pilot Trusts; Flexible Gift Trusts; and Lifetime Discretionary Trusts.
For clear and easy to understand knowledge, arrange an appointment with Owen today.