There is a common misconception that trusts, and the use of trusts, are solely for the very wealthy.
However the reality is that trusts are available and accessible to all people and should be considered by all families!
They are relatively easy to implement and, for the moat part, very cost effective. This has come from the development of trusts that can be drawn “off the shelf”, standard trusts that can be implemented into everyday situations to suit families with modest wealth.
In respect to the quantity of wealth, the benefits of trusts are proportionate. Whatever wealth or asset size needs to be protected, the value of using trusts is equal.
Whether £200,000 or £2million, protection and preservation of assets is paramount to any family looking to invest in a trust.
This article is not intended to express any technical aspect of using trusts to protect family, personal or business assets, however we can outline the main ‘headline’ benefits that introducing trusts can achieve:
• A trust can be employed to ensure that assets move through and between different generations of a family, protecting against children’s divorces (or financial difficulties, for example bankruptcy), from unnecessary taxes or from unexpected changes in family circumstances.
• A trust can be used to help with protection against assets being unnecessarily taken to pay for care fees.
• Trusts can help realise and pay-out assets on death, without the possible delays otherwise created by the probate process.
• They can be used to help with an efficient gifting of funds from grandparents or parents to help future generation’s university fees, or to support a property purchase.
These are just a few high level examples. Trusts are multi-functional, they allow people to control their assets through the generations, provide clear direction and critically keep assets within the bloodline.
In a modern world where people are living longer, where around 50% of all marriages end in divorce and with a backdrop of an ever escalating government deficit (implying higher tax on wealth in the future), trusts act as a wonderful protection against the unexpected.
A way to think of trusts in a simple manner is to view them as a means of “ring-fencing” wealth.
They can be used to keep life assurance benefits from being taxed if the life cover pays out, likewise with pension assets, and they can ensure that a business value is protected on death from the remarriage of a surviving spouse.
They are of use in most family and business situations, and should be used accordingly.
Are they expensive to put in place?
No, not in the great majority of cases because as stated at the outset they are now standardised to allow easy implementation. Any cost that is incurred is likely to be a fraction of the value they create in terms of peace of mind, or in the saving in tax they will create in the future.
They are not contentious, so they will not fall foul of any anti-avoidance measures introduced in recent years. They are part of the fabric of the financial and legal structures which are available to all people in the UK to use, to help them arrange their finances in the most efficient way.
We would recommend that you use specialist advisers such as Penguin Tax Planning who understand client needs and have vast experience to guide you through the journey.
Penguin Tax Planning can be contacted on 0800 2118526 or by email at info@penguintaxplanning.co.uk
