Discretionary Trusts Essex
When we die, we all hope that our loved ones will be looked after properly. The best way of doing this is by making a Will.
In making a Will you have the chance to put in place something known as a trust. This is a legal arrangement that provides a way to protect the assets held in it so that the beneficiaries receive all the benefits. In setting up a trust, there are different types of trusts that can be formed. One of these is the ‘Discretionary Trust’.
What is a Discretionary Trust?
A Discretionary Trust is a way for someone making a Will to leave assets in a trust so that it benefits family and loved ones. Unlike other trusts it has the most flexibility as it allows trustees the freedom to decide how to distribute the assets. There is no pressure on them to distribute the assets according to any fixed instructions. Instead, they can use their discretion as to how best the trust can support the beneficiaries.
Why should I use one?
Since it is the trustees who decide how to use the assets in a trust, you need to think carefully about whom you appoint. If your estate is complex or has a high value you may want to consider appointing trustees who are independent.
What are the tax implications?
Discretionary Trusts do have tax implications. The main ones are inheritance tax and income tax. Depending on the estate there may be others. With a Discretionary Trust, it can help plan for and manage inheritance tax liabilities in the best way that is legally possible. A trust will also have to pay income tax on the income it creates.
If you decide to set up a trust it is important that you get legal and financial advice. This ensures that the Discretionary Trust is established correctly and provides the protection you want for your loved ones.