TRUST: an arrangement whereby a person (a trustee) holds property as its nominal owner for the good of one or more beneficiaries.
Sound confusing? Let me explain.
A Trust is, in simple terms, an agreement that states Person A will hold the possessions of Person B for the benefit of Person C .
For example, say a person-let’s call her Julie- wants her house to be protected so that, if the worst should happen to her and her husband John, her children Dave and Mandy would inherit the house. To do this, Julie and John have made their Will stating that, when one of them dies, all their assets should go to the surviving partner. Upon the second death, everything is then to go to Dave and Mandy. All well and good, you might say; but let’s look at all the ways this plan could fall through.
Julie and John’s Basic Will doesn’t actually offer any protection to the assets mentioned within it; whilst it’s vital that their wishes are made clear, additional protection is required to actually safeguard their assets. So, let’s say John passes away first. The house now belongs to Julie- however, a few years later, Julie goes into care. To pay for it, she is forced to sell the house as well as use her savings. The estate is slowly depleted until one day, Julie passes away. Unfortunately, due to the time she spent receiving care- as well as the costs of her funeral- there is now very little for Dave and Mandy to inherit.
Let’s take a look at another scenario. Perhaps John passes away first, and several years later Julie finds a new husband. Julie’s new husband has moved into Julie’s house with his young daughter. Now that Julie and her new husband are married and living together, they decide to make a Will; however, this invalidates the old Will Julie made with John. Later on down the line, Julie and her new husband get divorced. Now, he has a claim to the house Dave and Mandy are supposed to inherit!
These are just two scenarios that can cause difficulties for Julie’s plan to have her children inherit the family home- there are countless others that can result in losses to Dave and Mandy’s inheritance.
So how exactly will a Trust help?
The most extensive Trust offered by Accord is the Estate Protection Trust (EPT). This powerful Trust can protect the home, saving and other assets; Julie could protect her entire estate and keep it safe for Dave and Mandy.
Assets within the EPT cannot be taken into account in a divorce settlement, as they are being held for the benefit of a third party. They are also exempt from care fee means testing, meaning Dave and Mandy can inherit the house even if Julie goes into care. The trust also protects against sideways disinheritance; that is, when children are disinherited thanks to a Will being invalidated through remarriage. This is because the assets are being protected and held for their benefit.
So, if Julie wants to protect her home and savings so Dave and Mandy can one day benefit from them, the way to secure the best chance of that happening is with an EPT. Clearly, Trusts are powerful agreements that can protect your estate for life and beyond- in fact, the EPT can protect your possessions for up to 125 years!
If you’re in Julie’s position and want some more information regarding protecting your estate, give Accord a call today on 01744 807048.