Trust me, it’s a Good Idea: The Simplicity and Power of Trusts in Wills.

Trusts, you may think, are the preserve of the ultra-wealthy or those juggling money between tropical islands – but that’s not always the case, not even often! The majority of trusts that lawyers deal with are simple but powerful ways to protect money or assets for those you care about. I’ll give you the barest sketch of what a trust is and three examples of how trusts can help you in your Wills.

On its simplest level, a trust just means that you give one or more people some property (including money) to hold it for others and/or themselves. The reason you do this is so the people who hold the property can give different benefits to different people. For example, you may want the trustee to give the income from a £100,000 investment to themselves, but eventually (or after they die) to give the investment itself to someone else.

Let’s paint a quick picture to illustrate three simple and useful Will Trusts. Mr and Mrs Smith jointly own a property worth £300,000 and each have savings and investments of £50,000.

Use 1: Protecting Children from Previous Relationships

Mr and Mrs Smith have 2 children together, but Mr Smith also has 1 child (Bob) from a previous relationship. He’s a bit worried that if he leaves everything to Mrs Smith in his will, Bob may end up getting very little or nothing.

What Mr Smith can do is add a trust in his Will that puts his half of the property (£150,000) and his investments/savings into trust when he dies. When he dies, his wife can still use the property, including upsizing or downsizing, and can also get the income generated from the £50,000 investment, but when she dies the underlying money (£200,000) will pass according to his Will, rather than to whatever Mrs Smith does. He can guarantee that Bob will eventually get some money, while also allowing his wife full use and enjoyment of the property and income while she is alive.

Use 2: Protecting Against Re-Marriage

Let’s imagine Mr Smith is a fair bit older than Mrs Smith. He may well die first, and he doesn’t want Mrs Smith to be wallowing forever – she could well meet someone else and start a new relationship! This is fine by him, but he’s worried that this could leave their two children forever bereft of any inheritance, if his wife leaves everything to her new beau.

He can do exactly what he did above, put a Will trust in place so that, when he dies, his half of the property and/or his investments can be used fully and freely by his wife during her lifetime, but that when she dies, the money will go according to his Will rather than hers.

Use 3: Protecting against Care Home Fees

Mr and Mrs Smith have no children from previous relationships and are not worried about either having relationships after either of them go, but they are worried about what impact care home fees could have on their estate. What if one of them dies and the other goes into care? Will anything be left for their two children?

This is an entirely reasonable worry. Care Home fees in the South East are often around £50,000 a year, and if you have the funds, the Local Authority will take them to cover the fees. In Mr and Mrs Smith’s case, one of them dying and the other in a Care Home would reduce the estate to nothing in as few as 7/8 years.

To protect against this they can both have mirroring trust Wills. When the first of them dies, the survivor can live in the property and use the income from the savings, but the underlying capital is protected. In this case, £200,000 will be protected for the intended beneficiaries of Mr & Mrs Smith, rather than being eaten up in Care Home Fees.

All I’m trying to show in the above examples is that a trust in a will can be applicable to a wide variety of quite common scenarios, and that they don’t need to be intimidating or complicated. If you want any more information about Trust Wills, advisors in our Private Client team are always willing to help.