Most people will protect their home and belongings by taking out an insurance policy. They want to ensure that their children’s inheritance does not end up in smoke.
However, whilst we would not think of not insuring our property against occurrences that are highly unlikely to happen, we overlook ensuring that our loved ones do not lose their inheritance to things that are far more likely.
For instance, did you know that you could protect your child’s inheritance from being lost to a matrimonial break up? With one in three marriages ending in divorce, that house your child inherited is far more likely to be lost to an ex than to a conflagration.
How can you protect your children’s inheritance from threats such as this?
Well, the answer lies in a Trust.
Trusts have been around for around 1000 years and they are part of the Common Law of the United Kingdom. The rich and famous have been using Trusts for centuries to ensure that family treasures stay within the bloodline.
Whilst your estate may not spread over thousands of acres, you have still worked hard to build it up. Do you really want to leave it susceptible to a number of threats that could easily be avoided?
So, if you transfer your property into a Trust, what can you protect it against?
Well, there is a number of things.
These are some of the threats to your estate that transferring your home and investments into a Trust can protect against:
- Firstly, any assets placed in Trust do not have to go through the Courts before they can be distributed. This saves expensive legal costs which can exceed 5% of the estate; that’s potentially £10000 on a £200,000 estate.
The assets can also be distributed immediately – no waiting for months for the Courts to say it is ok - If a widow/er remarries after the death of their spouse and the estate is in a Trust, the surviving spouse cannot Will the estate away to a new partner who may then “disinherit” the deceased’s children. A Trust ensures the estate stays in the bloodline where you intended it to stay.
- Sometimes it is just not advisable that a child inherits the total estate in one lump sum. This can apply to adult as well as children under the age of majority.
An adult child might have:- Financial problems – creditors cannot get their hands on assets inherited from a Trust
- Matrimonial problems – assets inherited from a Trust would be outwith any claim made by an ex in a divorce settlement
- Social problems – any estate inherited may just exacerbate, for example, an addiction problem.
- Health issues – benefits could be affected if a child inherits a lump sum. This is avoided if the inheritance comes from a Trust
- Legal Rights – In Scotland a child (or spouse) has legal rights which means they must be left a proportion of any moveable estate i.e. estate that is not land or buildings. By transferring your estate into Trust, you avoid having the complication of Legal Rights.
- Care Costs – so long as the transfer of your estate is not done just to avoid care costs, any estate in Trust is disregarded as an asset for assessment when it comes to having to pay for Care.
So you can see there are many reasons to place your property in Trust.
The key is to do it before any of the threats are knocking on your door by which time it could be too late.
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