In the every day course of my role at FMB, I find myself increasingly being asked questions regarding trusts. Most people are aware that these can be used to assist with inheritance tax planning, however trusts have many uses and advantages which not everyone is aware of.
1) Control over assets
You may wish to gift some money to your children but are concerned about what they will do with it. You may feel they are too young to use it responsibly. A trust can be used to gift the money to them but allows you to retain control over when they can access it, and what they can use it for.
2) Providing an income for a surviving spouse
A trust can be used to provide an income for a surviving spouse, whilst keeping the assets safe from any subsequent re-marriage and earmarking them for children. This can be especially useful for those who are married for a second time and have children from their first marriage.
3) Protecting family assets
You may be concerned that your children may divorce in the future, which sadly does happen a lot. Placing funds into trust may protect them against the spouse being entitled to half of them. Trusts also protect assets against creditors if your child is declared bankrupt.
These are just a few of the ways in which trusts can be used for other reasons than simply inheritance tax planning. It is essential to take proper advice, and this would normally involve both your financial planner and your solicitor. If you do not currently have a solicitor, at FMB we have many contacts who specialise in these particular areas and can work in conjunction with them.