United Kingdom residents with assets of $100,000 or more may be wise to consider using trusts as part of an estate plan. Trusts allow an individual to stipulate when and how their estate will be distributed, and they can provide peace of mind by ensuring that all heirs will receive their inheritance. Trusts may also mitigate the impact of estate and gift taxes.
Trusts may be a valuable estate planning tool when a significant amount of the estate consists of assets such as real estate, art and antiques or a business. Trusts also allow for payments to be made at specific times such as when a child comes of age or graduates college. Using a trust may also be a consideration for those who worry that their estate would be exhausted before their children come of age. Another benefit of trusts is that they allow disabled relatives to be provided for without impacting their qualification for assistance programs such as Medicaid.
In addition to possible estate tax savings, trusts may offer an estate protection from litigation and creditors. When a responsible individual is named as a trustee to manage affairs after a benefactor dies, they may also be called upon to perform these duties if the benefactor becomes incapacitated. Forms of trust include irrevocable life insurance trusts, qualified personal residence trusts, generation-skipping trusts and credit-shelter trusts.
While trusts offer many estate planning advantages, they are also varied and often complex. Trusts also work best as an integral part of an overall strategy. An attorney with experience in this area may be able to demonstrate how trusts can be combined with a will, a living will and a health care directive. While these matters may be difficult for many to contemplate, the knowledge that they have been addressed can provide comfort and peace of mind.
Source: CNN Money, “Estate planning: Is a trust beneficial?“, November 16, 2014
