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Q. What is a Family Trust?

A. A Family Trust is an arrangement you can use to protect your wealth from a number of threats. Trusts have existed for over 700 years, since the times of the crusades, and are now commonly used for the same purpose as they were back then, i.e. keeping family wealth in the family.

Q. Who is involved in setting up a Family Trust?

A. There are 3 parties. The Settlor puts assets into the Family Trust, the Trustees (can include the Settlor) manage the Family Trust and the nominated Beneficiaries (including you) can benefit from the Family Trust.

Q. What are the principal benefits of a Family Trust.

A. Because of the way trust assets are held they do not need to go through probate. This can save you thousands of pounds in costs and fees, especially with the new charges for the grant of probate from May 2017. It also avoids probate delays, giving beneficiaries immediate access to trust funds after you’ve passed away.

Q. Do I retain control?

A. Yes you do, if you want to, which most of our clients do. The Family Trust is governed by a document called a Trust Deed which is drawn up by our specialist trust barrister. Within the Trust Deed are clauses ensuring you retain control during your lifetime.

Q. What does discretionary mean?

A. The Family Trust is a discretionary trust. This means that any distribution is at the complete discretion of the Trustees. The Beneficiaries have no absolute rights to capital and this is very important in helping to protect family wealth from threats including sideways disinheritance, creditors, the taxman, divorcing spouses, and others.

Q. Can I give my home away or use a Family Trust to mitigate care fees?

A. Definitely not. Planning to deliberately avoid care fees is not allowed. You may be able to set up a Family Trust for other reasons but avoiding care fees must not be one of them. If you set up a Family Trust to avoid care fess it is very likely to fail if you go into care. Giving your house to your children does not work.

Q. What is wealth preservation?

A. Wealth preservation is also known as estate planning. Estate planning is all about taking the necessary steps to put planning in place now to ensure your wealth is protected and preserved during your lifetime so that it goes to the right people but only at the right time.

Q. Why might joint ownership be wrong for us?

A. Most people own property jointly with their spouse or partner. Joint assets cannot be distributed through your Will but do pass automatically to the survivor on first death. Because the survivor then owns 100% of the wealth (including the family home) those assets are exposed to unnecessary risk from sideways disinheritance and local authority care fees.

Q. I’ve heard about tenants in common; why is it important?

A. Tenants in Common allows you to say that you own the property in specific shares, usually 50% each. Because you now own a specific share of the property you can say in your Will what happens to your share and use a Will trust to protect the survivor whilst they are alive and ensure your share passes to your chosen beneficiaries after second death.

Q. What is sideways disinheritance?

A. Sideways disinheritance is nearly always accidental and happens by operation of law where assets pass to a new spouse or partner through joint ownership, marriage, intestacy or the wrong will and assets end up going down the wrong bloodline to someone else’s children. This can be easily avoided by using a Will trust.

Q. How does tenants in common protect my home from care fees?

A. It is usually the survivor of a couple who goes into care. If they own 100% of the family home then 100% can be assessed by the local authority. If they only own 50% then only 50% can be assessed. The first to die, 50% share is ring-fenced in a Will trust and is protected to go down to your children or loved ones in due course.

Q. Do I retain control?

A. Yes, of course. You would normally be a trustee of the Will trust which gives you a large degree of control but you also have all the rights and powers given to you within the will to ensure that you retain control whilst you are alive. The trustees must follow the terms of the Will trust.

Q. I have an old Enduring Power of Attorney “EPA”; is this still ok?

A. It may be. EPAs can still be registered and used in the event of loss of capacity. However, your EPA needs to be reviewed as it may have restrictions or conditions in it that means that it cannot be used at the moment.

Q. My capacity is fine; why do I need Lasting Powers of Attorney “LPA”?

A. Losing capacity is not just about old age and the health issues that brings. You can lose capacity in other ways, as a result of an accident or illness. But it’s the problems that come if you don’t have LPAs that makes them so important.

Q. What happens if I do not have LPAs?

A. If you lose capacity and do not have LPAs the only way to appoint someone to look after your affairs is to employ a solicitor and make an application to the Court of Protection for a deputy to be appointed. The Court can appoint a solicitor or court official so you can lose control of your financial and personal affairs.

Q. What are the main problems with a Deputyship application?

A. Firstly, losing control, secondly, initial costs of around £2,500 plus ongoing costs, and finally the application takes up to 12 months during which time all your banks accounts, including joint accounts, are frozen. You cannot pay bills, renew insurances or even pay for the deputyship application.

Q. What does a Lasting Power of Attorney deal with

A. The LPA for Property and Financial Affairs deals with collecting in income and benefits and making day to day payments at a lower level and looking after your other assets a higher level. The LPA for Health and Welfare deals with personal decisions to do with medical matters and anything to do with care.

Q. Do my attorneys have duties to follow my wishes?

A. Yes they do. The Mental Capacity Act is very clear and your attorneys have a strict legal duty to always act in your best interests at all times when making decisions for you.

Q. What happens if I do not have a Will?

A. The Laws of Intestacy will apply making it more difficult and expensive to wind up your estate. Intestacy tries to balances the rights of different classes of beneficiary so someone will always lose out. Intestacy rarely gives you the outcome you want.

Q. I am not married, what rights do I have?

A. Unfortunately unmarried partners have no rights under intestacy. You may also have a much larger Inheritance Tax liability than necessary.

Q. I have a basic Will – is it enough?

A. No. A basic Will leaves everything in the name of the surviving spouse or partner and substantially increases the risk of your children and grandchildren being disinherited as a result of a future relationship or in the event of LA care being needed.

Q. How can I use my Will as a financial planning tool?

A. Your Will can be used to maximise your loved ones inheritance by minimising the impact of sideways disinheritance and care fees. This is straightforward and inexpensive and does not fall foul of the local authority’s deliberate deprivation rules.

Q. I made a Will 10 years ago – do I need to review it?

A. Yes. Your Will should be tailored to your current personal and financial circumstances as well as your current wishes. As these change over time your Will should be reviewed every 3-5 years to ensure it is still fit for purpose and does what you want it to do.

Q. My children are young – can I protect their inheritance?

A. Yes. Children will automatically inherit at the age of 18, an age at which most people believe they would not spend their inheritance wisely. You can have the best of both worlds by delaying the age inheritance but still allowing funds to be applied for their maintenance, education or benefit.

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Estate Planning Solutions offer you a specialist will-writing and estate planning service, tailored to meet your specific requirements and to achieve your individual objectives. We pride ourselves in taking a truly customer-orientated approach and offer you a wide range of estate planning services focussing on solutions rather than off-the-shelf products.

We aim to maximise inheritance and minimise burden and costs for your loved ones.

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Miss HamiltonWest Yorkshire

“I have been very happy with the service I have received and Colin was superb at covering the difficult subjects involved in the processes. I will recommend him to everyone !”

Mrs LoweCheshire

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Miss PeachNewcastle Under Lyne

“A straightforward process thanks to yourselves. Extremely pleased to have finally sorted my Will and LPA with your company.”

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“Thank you for your help and thoughtfulness in the making of my Will. Everything was just perfect and I cannot fault anything. It was all very relaxed and not a worry in any way.”

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