There are three main types of Trusts in Wills
This type of Trust gives the Trustees-the people who run the Trust-complete discretion over who benefits from the Trust, as well as when and how they benefit. In a Discretionary Trust, nobody has the right to anything. A letter is left by the deceased to guide the Trustees as to their intentions for the Trust, but it is up to the Trustees to decide in what way various persons should benefit.
Disabled Discretionary Trusts
A Disabled Discretionary Trust enjoys favourable tax treatment. Also, if assets are held in a Disabled Discretionary Trust then any benefits due to the person will not be affected because they do not own the assets in the Trust.
A Life Interest Trust-now known as an ‘Immediate Post-Death Interest’
This type of trust gives a named person or persons in the Will the right to either income-if the Trust property is money-or if the Trust is holding property, then the right to live in a property for the rest of their life. This type of trust is used to preserve assets against being taken in the event of Long Term Care, or in a second or subsequent relationship or marriage, it guarantees that the children of the deceased will not be disinherited, if, for example, the surviving spouse should re-marry and change their Will.
A trust can be set up in a Will so that if both parents decease, the Estate can be held for the children up to a maximum age of 25. At the specified age, the Trust ends and the children are given the assets. The monies in the Trust are to be used to bring up the children, and the Trustees have access to the money, so that if, for example, a child reaches 18 and wishes to go to University, then money can be taken out of the Trust to pay for their fees, rent, books etc, or any other needs that the Trustees may consider necessary. Naturally when the children are younger, this money is used to pay for their upbringing.’
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