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Elderly ClientsThere are many different types of trust to choose from. Each has its own particular characteristics, administration requirements and tax treatment so it is important to get specialist advice from a solicitor. The following examples are intended to highlight some common trust arrangements which we can establish for you and we can provide bespoke trusts to suit any individual requirements. The identity of your trustees is of particular importance wherever they have a discretionary power and professional trustees, such as a director of Stonegate, can provide impartiality in administering your trust.

Life interests for spouses

A “life interest trust” refers to a trust in which someone has an immediate right to receive the income of the trust fund. Life interests for a spouse are common because of their tax treatment and the flexibility and protection they provide. They are often used by spouses with children from a former marriage, wealthy young spouses who are concerned about future remarriage by the survivor of them and by older spouses who are concerned about care fees.

Nil rate band discretionary trusts

A “discretionary trust” refers to a trust in which no-one has a direct interest in the trust fund and instead the trustees have a discretion as to who should benefit and when. Solicitors spent many years establishing these trusts up to the value of their married clients’ nil rate bands for tax planning purposes. Due to changes in the tax system, the use of nil rate band discretionary trusts has significantly declined in recent years although they may still provide inheritance tax savings, particularly for widower(s) who remarry, unmarried couples and for couples with certain assets. They also continue to provide potentially valuable protective benefits.

Discretionary trusts of business property and agricultural property

The government provides very generous relief against inheritance tax for the owners of trading businesses and to owners of agricultural land and buildings. Any such owners need to ensure they obtain detailed and specialist advice from both their solicitor and their accountant. The drafting of Wills dealing with these assets is a particularly specialist area and one for which we have a strong reputation. We have seen many clients come to us with pre-existing Wills which fail to take advantage of these reliefs which is particularly disappointing because there are now so few reliefs available to the testator.

Age contingent trusts for children

“Too much to young” is sadly a common problem and testators need to be aware of the detrimental effect which a large legacy can have upon a young person. Careful consideration needs to be given to the age at which a young beneficiary should inherit particularly in view of the complex and varied tax treatment of these trusts.

Trusts to protect vulnerable beneficiaries

Obviously a Will only becomes relevant at the time of the testator’s death and the date of death is usually unpredictable. As such an immediate transfer of significant funds under the Will is not always the most appropriate course of action. Your beneficiaries may well be of age but still vulnerable to bankruptcy, divorce, the influence of third parties or perhaps dependent upon means tested benefits. In any of these situations a trust to protect the value of the estate for your beneficiaries can be extremely useful and you should give careful consideration to the use of a trust to give your trustees the time to reflect upon the circumstances of your beneficiaries and fulfil your wishes at the right time and for the right people.