Many of us have heard the term trusts but most of us do not really understand what a trust is or does.
A trust is a powerful estate planning tool used to protect your assets as far as possible so that even after you have gone it helps to ensure they do not end up in the wrong hands.
Why would I need a trust?
There can be many circumstances in which a trust can be useful. For example, the majority of people own their home with another person as joint owners. This means that when one of them passes away the other inherits their share of the property automatically.
On one hand this may seem like a great idea. However, it may result in your share of the property ultimately being owned by someone you would not want to benefit or even someone you have never met!
To provide a real-life scenario, imagine that Mr and Mrs Smith own their home as joint owners. Mrs Smith sadly passes away and the home is then owned 100% by Mr Smith. Potentially should Mr Smith remarry his wife’s share in the home could end up going to his new wife or even his new wife’s children. Mrs Smith’s own children could be left without!
Should Mr Smith need to enter care then the property will be considered by the local authority for care costs. Once again, any children of Mr and Mrs Smith could lose any inheritance they had.
Another common issue occurs when someone has passed away and their assets are distributed absolutely.
For example, using the above scenario when Mrs Smith passes away imagine that she has requested in her Will that her savings are to be split between her two children. Her son Billy is about to go through a divorce and so it is likely that some of Mrs Smith’s savings could go to Billy’s ex-wife. Mrs Smith’s daughter Karen has her own business which is facing bankruptcy. Karen’s creditors will take into account any savings Karen receives from her mother as part of the bankruptcy proceedings.
A trust could help protect against all of the above scenarios.
If you would like to hear more about what a trust can do for you then please contact one of our members. Get in touch to learn more about our asset protection services
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