Will Trusts & Life Interest
Your executors are the people who collect in your assets and deal with all legal and administrative requirements following the death. Often, the same people are also appointed as the trustees of any ongoing trusts. You need at least two trustees, and they should be people who will act in the interests of your chosen beneficiaries, as well as being able to manage the legal duties and responsibilities that trustees must comply with.
All trusts are created by formal legal documents, and for a Will Trust, the trust deed is the Will itself. The Trust comes into effect when you die.
There are various reasons why a Will Trust may be helpful, and different ways they can be used. You might want a trust in your Will so that assets can be held until a specific event, such as your children reaching age 18 or 25 (or a different age). Or you may want them to receive a share of the assets over an extended period of time such as five years, rather than receiving their whole inheritance at once.
You may want to create a discretionary trust so your trustees make decisions about which of your nominated beneficiaries will inherit, rather than you fixing the entitlements in the Will. The trustees can then respond to changes in circumstances and tax rules, and make their decisions accordingly.
A Will Trust can also be used to deal with successive interests in assets, often properties. If you leave a property to someone outright, it becomes 100% theirs and they can do whatever they want with it. Some people prefer to leave their property into a trust so the beneficiary is able to live in the house or benefit from any rental income for the rest of their life. When that person dies, the trust specifies what happens to the property then, so the original owner retains control as to where the asset goes next. The first beneficiary has a life interest in the house and is able to enjoy or benefit from the property or its income, but cannot dispose of the capital. This is protected by the trustees, who pass it on to the next named beneficiary when the first dies.
There are many different types of trusts, each with their own rules, regulations and tax regimes, so it is important to take specialist advice before deciding what sort of trust to create, and how to leave your assets.
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