How to Protect YOUR Wealth for YOUR Family
Are you worried about your children’s inheritance being lost through a divorce, or relationship breakdown, after you are gone?
This article explains how better planning through the use of trusts can help you avoid problems such as these.
There is a common misconception that trusts, and the use of trusts, are solely for the very wealthy. However the reality is that trusts are available and accessible to all people and should be considered by all families! The house that you plan to leave to your kids is just as important as the family whose house is worth twice as much as yours, isn’t it?
They are relatively easy to implement and, for the most part, very cost effective.
This article is not intended to express any technical aspect of using trusts to protect family, personal or business assets, however we can outline the main ‘headline’ benefits that introducing trusts can achieve. For a more detailed look see our guide to trust planning, which can be downloaded, for free, here
The main Trust Advantages
- • A trust can ensure that assets move through, and between, different generations of a family, protecting against children’s divorces (or financial difficulties, for example bankruptcy), from unnecessary taxes and from unexpected changes in family circumstances.
- • A trust can be used to help with protection against assets being unnecessarily taken to pay for care fees.
- • Trusts can help realise and pay-out assets on death, without the possible delays otherwise created by the probate process.
- • Trusts can be used to help fund your grandchildren’s university fees, or to support them with getting on the property ladder many years from now
These are just a few high level examples. Trusts are multi-functional, they allow people to control their assets through the generations, provide clear direction and critically keep assets within the bloodline.
In a modern world where people are living longer, where around 50% of all marriages end in divorce and with a backdrop of an ever escalating government deficit (implying higher tax on wealth in the future), trusts act as a wonderful protection against the unexpected.
A way to think of trusts in a simple manner is to view them as a means of “ring-fencing” wealth.
They can be used to keep life assurance benefits from being taxed if the life cover pays out, likewise with pension assets, and they can ensure that a business’ value is protected on death from the remarriage of a surviving spouse.
They are of use in most family and business situations, and should be used accordingly.
Are they expensive to put in place?
No. Any cost that is incurred is likely to be a fraction of the value they create in terms of peace of mind, or in the saving in tax they will create in the future.
They are not contentious, so they will not fall foul of any anti-avoidance measures introduced in recent years. They are part of the fabric of the financial and legal structures which are available to all people in the UK to use, to help them arrange their finances in the most efficient way.
We would recommend that you use specialist advisers such as Penguin Tax Planning, who understand client needs and have vast experience to guide you through the journey.