Making a Will brings peace of mind that your loved ones will receive the inheritance you wish to give them in the future. However, a Will alone does not always protect against the ‘what ifs’: those unexpected yet common life events that could lead to your loved ones losing their inheritance. Here we look at the benefits of using a Trust alongside a Will to make a formidable estate plan.
If you have specific wishes for what happens to your estate when you die, it is essential to have a Will. If you were to die without a Will (intestate), the process of administering your estate is more complex and will take longer – and there are no guarantees that your estate will be shared in line with your wishes.
Using a Trust or Trusts alongside a Will offers many benefits and can:
- Prevent ‘Sideways Disinheritance’ (assets ending up with someone you did not intend them to)
- Reduce the sometimes adverse effects of inheritance
- Ensure your loved ones inherit at the right time
- Prevent a successful challenge of your legacy wishes
- Avoid the costs and delays of Probate
- Reduce the burden of Inheritance Tax
Preventing Sideways Disinheritance
Including a Trust within your estate plan will ensure your assets end up where you intended.
Examples of common life events that can cause sideways disinheritance include:
• When a widowed spouse remarries – If a surviving spouse remarries after the death of their husband or wife, any assets that were jointly owned or inherited by the survivor would usually be shared with their new partner. So if your surviving spouse remarries, their new partner is entitled to half your assets – or all of them if their new spouse outlives them.
By using a Will Trust, assets put into it can be protected for your children even if your spouse remarries.
• When a beneficiary gets divorced
Assets left to a person in a Will, will form part of their estate and therefore will be included in any financial divorce settlement with their husband or wife. Perhaps more surprisingly, whilst you are still alive, the inheritance a beneficiary is to receive in the future can be considered, with a portion being handed over when it is received.
If assets are left to a Trust they will not form part of your beneficiaries’ estate.
• When a beneficiary is in financial hardship
If you leave your assets to a beneficiary through a Will alone, when you die ownership of those assets transfers to whomever you left them to. If the beneficiary is, or has been in financial difficulty, their creditors could seize their inheritance.
Whilst in a Trust, assets cannot be seized by creditors
• When a beneficiary dies prematurely
Imagine, for example, that you have left assets via a Will to a married son who has children of his own. If your son were to pass away whilst your grandchildren were still young, his inheritance would usually pass to your daughter-in-law. If she were then to remarry, your son’s inherited assets would normally be shared with her new partner. If the new partner also has children, the grandchildren’s inheritance would be diluted further, and they could be disinherited completely if your daughter-in-law did not outlive the husband.
Children of your beneficiaries (e.g. your grandchildren) can be included as beneficiaries of the Trust
Protecting the future
It is possible to avoid all these outcomes and protect your loved ones’ inheritance by placing property and/or assets into a Trust. Our Barrister Intermediary, Sharon Rigden, can advise you on the best structure to meet your individual requirements.
Arrange a free consultation to review your existing Will or to discuss setting up a new Will or Trust. Your Will Review will be a relaxed, informal session at a time and a place to suit you, and you are under no obligation to take any action based on Sharon’s recommendations. Call Sharon on 01772 431233 or email firstname.lastname@example.org