Abacus helps parents establish trusts to ensure their children’s well-being and security if they are unable to provide it themselves.
Trusts can be an effective way to safeguard the interests of youngsters and their appeal lies in the control they offer.
A trust can disperse funds when a child reaches a certain age, or they can include payment schedules or provide a lump sum. This flexibility allows financial support to be tailored to best suit a child's needs.
In this article, the Abacus team of professional trustees has set out its top 10 reasons why trusts are a valuable tool for families who are addressing estate planning.
1. Control over assets
The trust deed can specify how and when a trust's assets should be distributed to children. This control can ensure assets are used for the children's benefit, such as for education, healthcare and general welfare.
2. Protection
An Isle of Man trust allows for the appointment of a Protector, which provides an additional layer of oversight for the Settlor.
3. Management by a trustee
A trustee is responsible for managing the trust's assets according to the terms set out in the trust deed. This can be particularly beneficial when the children are too young to manage assets themselves.
4. Tax benefits
A trust can offer various tax advantages, potentially reducing the overall tax burden on the estate and maximising the benefit to the beneficiaries.
5. Avoidance of probate
Assets placed in a trust typically avoid probate, the legal process of distributing a deceased person’s estate. Avoiding probate can save time and legal costs and ensure assets are distributed according to the parents' wishes without court intervention.
6. Continuity and stability
Trusts provide a mechanism for the continuous and stable management of assets, particularly during the turbulent period after a parent's death.
7. Special needs planning
For children with special needs, it is possible for a trust to provide for long-term care without disqualifying them from government benefits.
8. Avoidance of guardianship issues
If a child inherits assets directly, a court-appointed guardian may be needed to manage those assets until the child reaches adulthood. A trust can eliminate the need for court intervention, as the trustee manages the assets according to the trust deed.
9. Flexibility
Trusts can be tailored to meet specific family needs and can include provisions for various scenarios, such as if the child reaches a certain age or achieves specific milestones.
10. Privacy
Trusts are generally private documents, unlike wills, which become public record when probated. This privacy protects the family’s financial affairs from public scrutiny.
Abacus has a reputation for offering a market leading service for the establishment and management of trusts and has a great deal of experience dealing with sensitive and complicated family dynamics.
No action should be taken on the basis of this note, nor should it be construed as amounting to tax, legal or VAT advice. Suitable, specific and professional advice should always be obtained in respect on any particular issue.
