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How to Set Up an Estate Planning Trust

How to Set Up an Estate Planning Trust

By In Asset Protection, Blog On 23/06/2020


An estate planning trust is separate to your Will and must be made during your lifetime. Trusts are complex legal documents, so you must ask a specialist solicitor to set the trust up for you. Otherwise, it could be considered invalid.

What is an estate planning trust?

An estate planning trust is when you place certain assets – such as your property – into a trust. Unlike testamentary trusts, an estate planning trust takes effect straight away, rather than on your death. This means that whoever you name as your trustees will immediately have control of the asset. These trustees will continue to control the asset until your death. After your death it is passed on to your beneficiaries.

Why would you set up an estate planning trust?

Relinquishing control of your property, or any other asset, might seem like a strange thing to do. There is a degree of risk in doing so. Nevertheless, you can still benefit from the asset while you are alive. But you are effectively removing the asset from your own estate and placing it into the safety deposit box of the trust. It will remain there until your death, after which it is inherited by your beneficiaries. So, why might you want to do this?

One reason is that if you later go into a care home, the size of your estate will be considerably smaller than if you still owned the property. This will be beneficial when the local authority conducts a means test, which is used to determine whether or not you should pay for your care home fees. If your estate is small enough, and you are not accused of the deliberate deprivation of assets, you will receive financial support. Your property then remains intact for your beneficiaries, rather than being sold to fund your later life care.

There are also other advantages to an estate planning trust. For instance, it ensures the asset is inherited by the correct people. Without the right planning, your children from a previous relationship could be accidentally disinherited. Or, people connected to your beneficiaries may end up with a slice of the pie, such as a daughter/son-in-law or step-children. An estate planning trust can also simplify the probate process. Additionally, it can make things easier if you ever lose mental capacity in the future.

How do you set up an estate planning trust?

So, exactly how do you set up an estate planning trust? The answer is: with the help of a solicitor. Trusts are extremely complicated and the wording needs to be exact. There is also a lot at stake – namely the fate of your biggest assets, and the way in which they are controlled both during your lifetime and after you are gone. It is therefore vital that you ask a specialist solicitor to create the trust on your behalf.

If you do not instruct a solicitor, you run the risk of setting up the trust incorrectly. If so, it could be deemed invalid. Alternatively, a clause may be ambiguous or infer the wrong meaning. This could create difficulties for either you or your beneficiaries. A mistake could also result in an unforeseen tax bill. By having a solicitor set up your trust, you can be confident that the trust will achieve the desired outcome, without any adverse consequences.

When to set up an estate planning trust?

You can set up an estate planning trust at any point during your life. Estate planning trusts are lifetime trusts. As the name suggests, they are set up in your lifetime and become active during your lifetime. This differs to a Wills trust (also known as a testamentary trust). These are specified in your Will and arise on your death. Even so, it is prudent to make a Will in addition to a lifetime trust, as this ensures all your wishes are fulfilled following your death.

There is no right or wrong time to set up an estate planning trust. However, if you are means tested for care home fees and you have only recently transferred the property into the trust, you could be accused of the deliberate deprivation of assets. In light of this, it can be better to act sooner, rather than later. You can always change or revoke the trust during your lifetime, should you want to.

Wills and trusts solicitors Sunderland

If you would like to set up an estate planning trust, please call our Sunderland solicitors on 0191 567 7244 and we’ll be happy to help you. 

We specialise in Wills and trust law. We can discuss estate planning trusts with you in further detail, explaining whether such as trust is suitable for your set of circumstances. If you would like to proceed, we can set up a trust on your behalf, ensuring your assets are protected for the generations to come.

If you would rather contact us online, email us at info@cooklaw.co.uk and one of our team will be in contact with you shortly.


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