There are many different types of trust that can be used in a Will but the most common ones are:
This trust can only be set up by the parent of a young person and can continue until the child is 25. Until the child attains the age of inheritance stipulated in the Will, the fund will be invested by the trustees and the income can be applied for their education, maintenance or benefit.
A specific amount of money or the whole of your estate can be placed into a discretionary trust. The appointed trustees have the power to decide how much money to give to whom (from a list of potential beneficiaries you have specified) at whatever time and for whatever reason they see fit.
This type of trust can be particularly helpful when making provision for children of different ages, for a disabled beneficiary, or for other dependant beneficiaries who it is felt may have difficulty managing their own finances. The trustees would be able to distribute the funds to who needs it and when, and in varying amounts. Any remaining monies can be kept invested until needed. This type of trust can last for up to 125 years from the testator’s death, meaning that monies can even be kept for future generations.
As the beneficiaries listed are only ‘potential’ they have no right to any monies – only a hope. It is for these reasons that the monies can be protected against any bankruptcy, divorce, or means tested benefits of a potential beneficiary.
A letter of wishes is usually placed with the Will, giving the trustees guidance.
Life Interest Trust
This type of trust usually contains the family home and is often referred to as a ‘Property Protection Trust’.
The trust is commonly used to ensure that the survivor of the spouses will always have somewhere to live, but also that the share of the first to die cannot be used to fund care home fees, or will be lost to a subsequent marriage, thereby ensuring that their share will ultimately go to their chosen beneficiaries (often their children) but without having deprived their spouse whilst alive.
Variations of this type of trust can contain other types of assets, can provide an income or can restrict the amount of time someone can continue to live in a property.