12 December 2011

What can you achieve with trusts?

Trusts have various benefits to financial planning. Here are some things that you can use them for.
Give money to children, but don't give them access until they are 18 (or possibly older ages)

Pass the benefits of a life assurance policy to the beneficiaries promptly without waiting for probate on the deceased person

Avoid Inheritance Tax on your investments - various options here, depending on the situation - some provide limited ongoing access to the investments for your own use

Avoid a future Inheritance Tax liability on a pre-retirement pension fund by passing it to the children not the spouse ("spousal bypass trust")

Pass assets to grandchildren (e.g. for education) - skipping a generation who have their own assets / IHT liability

Trusts are basically simple - you are creating a new legal identity which can own something. But they can get complicated when considering taxation, so it is always worth taking professional advice in setting one up (and in managing its investments if it has any, since the trustees have a legal responsibility towards the beneficiaries).

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