All Your Lifetime Trusts Questions Answered.
Lifetime Trusts Explained: What is a Lifetime Trust?
It's useful to think of a lifetime trust by comparing it to a will trust.
A will trust is established by a Will, on death. Effectively, the trust is set up when you die.
A lifetime trust is established now, in your lifetime.
The trust has 'Trustees' who are responsible for the management of the Trust, an beneficiaries, who do/will receive a benefit from the Trust.
There may also be someone with a life interest.
What Lifetime Trusts does Town & Country Law offer?
Town & Country Law offer a Family Probate Trust.
The primary purpose of this trust is to speed up the process of inheritance to your beneficiaries, and to avoid unexpected things happening in that process.
We offer this trust in 2 different forms: as an interest in possession trust, or as a discretionary trust. These trusts offer different benefits, and we can of course provide you with advice as to which is more suitable.
What is a typical scenario for the use of a Probate Trust?
Often, Clients who have been through the probate process before, tell us that they don't want to put that responsibility, along with the potentially long process, on to their beneficiaries (usually spouses and children).
Given that the requirement for obtaining probate to enable beneficiaries to receive their inheritance takes 6 month to 2 years on average, some Clients want to speed this up, and simplify the process where possible.
A usual scenario would be for example:
A married couple have 2 children. They establish a trust of their main asset, their family home. They appoint their children as trustees and beneficiaries, and reserve a life interest for themselves.
In this scenario, their children would inherit the home immediately on their death, without the need to obtain a grant of probate.
Happily, this is much quicker in terms of speed of inheritance, often with much less hassle. Further, it can be significantly cheaper than the alternative of instructing a solicitor, or sometimes a bank, to obtain a grant of probate etcetera.
Are there any other benefits?
Yes, there can be. These include:
-Wills can be changed, even up to 2 years after death. Trusts cannot be changed in the same way;
-Trusts can be more difficult to challenge than Wills;
-Estates can be lost to children through unexpected second marriages of widows (sideways disinheritance);
-If you lose capacity to deal with your own affairs, the trustees of your trust can manage your home and ensure proper provision is made for you;
-Some trusts can save your children from being pushed in to paying Inheritance Tax on their estates;
Are there any other considerations?
Yes. If you establish a Probate Trust, you have to consider whether you would fall foul of the rules on Deliberate Deprivation.That is, if you require (usually) long term residential care in the future, could a local authority claim that you had deliberately deprived them of that asset.
Please see our guide to, amongst other things, deliberate deprivation here.
If you believe, reasonably, that establishing a Probate Trust would fall foul of these rules, then you can plan your estate using a Will Trust.