Ask The Legal Expert: How Can I Ensure My Assets Stay In My Family After I Die?

My wife and I want to make Wills to ensure the surviving spouse will be well provided for after one of us dies. Whilst we are happy to leave everything to each other we want to make sure that any remaining assets go to our children and grandchildren rather than to a new partner or to a new partner’s family if the surviving spouse remarries. Can a Trust help us with this? How do they work?

It is good that you are making arrangements ahead of time. Around 54 percent of people in the UK die without making a legal Will and this can cause added stress for those left behind, particularly if complex relationships are involved.

You can set up a Flexible Life Interest Trust in your Wills to give security and peace of mind to each other and to the next generation. Many couples set up this kind of Trust in a Will to leave assets for the benefit of the remaining half of the couple, and also to stipulate that, upon the death of the remaining partner, the assets must stay within their family, rather than, for example, going to a new partner and any step-children if there is a remarriage.

Trusts come in many forms, and they can be used to protect money and other assets for beneficiaries under a variety of circumstances. A Trust is simply a way of managing assets. The parties involved in a Trust are; The Settlor – the person who sets up the Trust, by putting the money or property into the Trust, the Trustees, who are the people you entrust to look after that money or property, and the Beneficiaries, the person or people who you wish to benefit from that money or property.

Simpler forms of Trusts can often be used in Wills. For example, you may wish to benefit a child who may be under 18 at the time of your death and so cannot legally accept money or property for themselves. You would appoint Trustees to look after the inheritance until the Beneficiary reaches a certain age. Even if a child is over 18 you might still decide to appoint Trustees to manage their inheritance until they are older, perhaps 21 or 25.  You don’t even need to stipulate an age at all but you can leave this to the discretion of the Trustees. By leaving this discretion with your chosen Trustees you are saying you trust them to decide when would be the right time for a Beneficiary to have control of funds themselves. 

Trusts can be used to protect vulnerable beneficiaries who cannot manage money or property – whether because of addiction, lifestyle choices or disability. It may be the case that the Beneficiary will never be able to manage their own finances. In this case we can help you to set up a Trust that lasts for the lifetime of the Beneficiary and protects their interests.

Trusts can be set up during your lifetime, not just under your Will. For example, you may want to pass money onto someone while retaining some control over how the money is used – for school or university fees, for example. Setting up a Lifetime Trust and appointing yourself as one of the Trustees is one way of doing this. 

Trusts can be used for tax planning purposes in helping you to minimise your likely exposure to Inheritance Tax. 

Trusts can be straight-forward tools, but they must be tailored to suit individual circumstances to ensure they function well. It is important to seek expert legal advice from a specialist at the earliest opportunity as Trusts have tax and other legal consequences that can trap the unwary.

JCP’s Lifetime Planning team is on hand for legal support. Contact us on law@jcpsolicitors.co.uk or call 03333 208644.

This question is based upon a hypothetical situation.