What is estate planning?
At the heart of Estate Planning is the desire to protect assets and where possible mitigate inheritance tax. it can take many form and use different techniques depending on what compose our estate (real-estate, cash, investments), the age of our children and our particular family situation. It can be done during our life time, leveraging the use of trusts, the ability to gift assets, specific investments, business property relief investments, etc. Your advisers are Estate Planners and Independent Financial Advisers.
The typical objectives of an estate plan are:
To protect assets against potential 1/3rd parties, bankruptcy, divorce, mean testing, etc.
To protect against sideways inheritance (your bloodline losing your estate to a surviving partner new family) in case of premature death of a spouse/partner.
To protect assets to provide for a vulnerable child or family member.
To protect your inherited estate against your children potential divorce, bankruptcy, etc.
To make sure your the right people are in charge of your estate after your death (trustees, guardians of your choice).
To provide a vehicule to pass wealth through the generations in a tax efficient way.
To mitigate your estate inheritance tax by leveraging all the tax exemptions permitted by law. .
Estate planning is for everyone, not just the rich among us. It can done via a will and/or during our life time.
What is a trust
The concept of trusts have been in existence since the greek antiquity and developed further under the roman empire and later the crusades. Contrary to popular belief, trust are not just for the rich!
A trust is essentially and agreement between a settlor (who create the trust and transfer - settles - assets to the trust), trustees (who manage the trust and look after the assets), beneficiaries (who benefit from the assets of the trust). It is a great device to protect assets and transfer them to our descendents in a safe and efficient way.
Assets are own by the trust (although you can retain benefit of those assets) making it more difficult to be taken away from you or your beneficiaries, or to be taken into consideration for mean testing situation.
Trust can be set-up during our life time (Life Time Trusts) or via our Will (Will Trusts). The two main type of trusts are
Bare Trusts, where the beneficiary has total and immediate right to all of the capital and income of the trust at any time if they’re 18 or over (in England and Wales). The assets set aside by the settlor are guaranteed to go to the intended beneficiary. They are often used to pass assets to young people.
Discretionary trusts: is a trust where the trustees hold the power and discretion to decide how the capital and income is distributed to the beneficiaries. There is no absolute guaranty that a beneficiary will receive income or capital at any point. This create more flexibility and protect the assets in the trust against 1/3rd parties.
Other type of trusts are usually variations of discretionary trusts, where the trustees are require to apply the income and/or capital for specific baneficiaries or class of beneficiaries.
What can I put in a trust?
Anything that can be owned can be settled in a trust, from a house, investment properties, art, jewellery, expensive furniture, shares of a company, cash, investments, and more.
We typically work with families to:
Protect their main residence against being lost to care fees, giving the control back to the owner on how to use the wealth in the main residence rather then living the decision to local authorities.
Gift part of a main residence to children in order to mitigate inheritance tax on the property.
Create funds to support vulnerable people who need other people to manage their finance for them.
Pass asset to children securely in an inheritance tax friendly way.
Protect assets and income for a spouse/civil partner for life.
Leverage the benefit of Business Relief to pass assets and shares of a business and benefit multiple generations.
Pass cash to children whilst protecting against their divorce, banckruptcy, litigations, etc.
As part of our service, we offer advice on how to leverage our customer’s trust fund for the best tax efficiancy.
Are trust for me?
Trust are for everyone with assets they want to protect.
Contrary to popular believe trust in general do not systematically cancel the inheritance tax liability of an estate. Only trusts created for the purpose of gifting assets and expressly exclude the settlor (the creator of the trust) from being a beneficiary can be used to mitigate inheritance tax.
However, trusts that carry on after the death of the settlor do pass the wealth down the generations free of inheritance tax. This is how large family fortune are created and sustained over the generations.