As the saying goes, “you can’t take it with you”. Whilst this is true, you can and should do all you can to control your assets after your death to remove as many obstacles in the management of your estate as possible.
In the UK there are two main methods of estate planning. These are through a “Will” or a “Trust”. However, these terms are often confused, and there are a wide range of different types of Trust that are available.
A Single Will
This is a Will that is for an individual person who wants to record their wishes. Whilst it is often presumed that a single Will is for people who are not in a relationship or are divorced, that is not the case.
A single Will can be made by people who are married, in a civil partnership or in a relationship. A single Will may be the best option if you and your partner have different wishes following your deaths.
These are designed for couples whose wishes are identical, or almost identical. A Will is produced for each person, but the contents ‘mirror’ each other.
There is a common misconception that you have to be married or in a civil partnership to make mirror Wills. It is often more cost-effective for couples to choose to make mirror Wills. It is worth noting that there is still the flexibility to make personal decisions regarding funeral arrangements.
If both you and your partner do not share the same wishes, then single Wills should be made. It is also worth noting that a mirror Will can be changed by either person without the other knowing. This means that you cannot be 100% certain of the other person’s Will remaining the same.
Different types of Trust will do different things. It is important that you carefully consider which option may be the best for you and your circumstances.
Property Trust Wills
This type of Trust lets you create a trust in your Will to deal with your property after your death. You will name a person or persons as your Trustee(s) to manage the Trust and the terms of the Trust allow for a named person to benefit from the Trust during their lifetime.
This benefit is the right to reside in the property. If there is money in the Trust due to the sale of the property, then the benefit is the right to receive the money generated by the sale of the property, i.e. the interest earned on the sale proceeds.
Life Interest Trust Will
With a Life Interest Trust, you can put the whole or part of your estate in the Will Trust, rather than just a property. You will still need to name a Trustee or Trustees as well as naming someone who will benefit from the Trust in their lifetime. Again, if the Trust contains a property, then the benefit is the right to reside in that property. If the Trust contains cash, then the benefit is the right to receive the income from the Trust assets.
Discretionary Trust Will
A Discretionary Trust Will can be used to leave part or all of your estate to a Trust that is created in your Will. You will name Trustees and also name Beneficiaries who may benefit from the Trust, this will often include a spouse or partner, children, grandchildren etc but you can name whoever you wish.
The Beneficiaries do not have a specific entitlement in the Will Trust. The Trustees have full discretion to decide which Beneficiary will benefit at any given time, and to what extent. This may mean that some Beneficiaries will not benefit at all.
The types of Trusts discussed above can also be set up with immediate effect in your lifetime. However, most people choose to have these arrangements take effect on their death, and therefore build the Trust into their Will as discussed above. If you want to know more about which is best for your situation, contact our experts in wills, trusts and probate today for our expert help.