Using a trust to cut your Inheritance TaxSmart Will
Using a trust to cut your Inheritance Tax
We all hope that as long as we are alive, that we are able to manage our own money and our own property too. For many people this might be the case, however, for other people there comes a time when they are not able to manage their own finances and they need someone to take charge. This is where the idea of setting up a trust comes into play.
But what is a trust and why might you need one? Let’s take a look at them in a little more detail.
What is a trust?
As we have already mentioned, there could come a time in your life when you are unable to retain control over the assets, property and money that you have. This is particularly true if you end up falling ill and going into care, which in turn needs to be paid for.
You may be lucky enough to have a friend or family member who can ask to take care of your money and make sure that your bills and care requirements are paid for. However, what if you are worried that they are not going to spend your money as they should?
This is where a trust can come into play. A trust is a legal arrangement where one or more people (or a company should you prefer it) will take control of your money and your assets. It is then a part of the agreement that the person needs to use the money in order to benefit you or any other beneficiary that you may have outlined.
You can put any kind of asset or investment into a trust, however, you will need to be aware that you may still have to pay tax and complete tax returns, which will be down the trustee to arrange.
Why might you need to set up a trust?
The most common reason that someone needs to set up a trust is so that it can support someone who cannot manage their money. This is to ensure that not only your needs are looked after, but that you, yourself is looked after too.
Another reason that people may set up a trust is because they have a child who has a mental health condition or a learning disability and you are concerned about how they will manage their finances after you have passed away. This even includes ensuring that benefits that they receive are used correctly.
It might be the case that you never have to set up a trust for yourself or for someone in your family, but there is still a chance that it may happen. Therefore, knowing about what you need to do and why you might need one, will help you to get off the ground and look into the process in more detail.
Want to set up a trust?
You can set up a trust right now or write one into your online will using our online will writing solution.
When you set up a trust you need to clearly state:
- what the assets of the trust are
- who the trustee and beneficiaries are
- when the trust becomes active – is it immediately, or only when you die?