As a reasonably well-to-do United Kingdom resident, you may have heard your friends and neighbors talking about their various trusts and wondered if you, too, might benefit from setting up a trust. There are many different types of trusts, and which one(s) may be best for you depends on your own situation, goals and objectives.
FindLaw points out, however, that in general, all trusts provide the following benefits:
- Your ability to place conditions on when, to whom, and under what circumstances your trustee distributes the trust assets
- Your ability to distribute your assets to your heirs after you die without having to go through probate
- Your ability to reduce your estate and gift taxes
- Your ability to protect your assets from creditors and lawsuits
- Your ability to appoint a successor trustee who acts in the event that your primary trustee dies or becomes unable to continue serving
Flexibility and tax savings
A trust can be just about as flexible, varied and complex as you wish it to be. The one thing you need to keep in mind, though, is that once you put your assets into a trust, you no longer own them, even though you can still benefit from them. The trust itself owns the assets. Nevertheless, you can designate yourself as the trustee in many situations.
Given that the Tax Cuts and Job Act of 2017 raised the federal estate tax exemption to $11.18 million for an individual – double that amount for a married couple – this means that you and your spouse have a very good chance of ultimately passing all your assets to your children, grandchildren and other heirs entirely free of estate taxes.
Living trust
One of the most popular trusts is a living trust, also called an inter vivos trust or a revocable living trust. Whatever you choose to call your living trust, it is one you set up during your lifetime and which you can revoke at any time you choose. You also can act as your own trustee. If this trust is still in existence when you die, the executor of your pour-over will places any assets that you own at the time of your death into this trust if you neglected or forgot to put them there during your lifetime.
You can choose to set up several types of trusts in place of or in addition to a living trust. Your estate planning advisor can answer all your questions and help you determine which one(s) best suit your purposes. While this information is not legal advice, it can help you understand the purposes of trusts and the benefits you and your beneficiaries receive from them.
