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Keeping Assets in the Family

Keeping Assets in the Family

Family Trust Deed

How to put a ring of steel around your family's assets.

What it's for

This is an efficient way to gift money and assets to your family during your lifetime, while protecting those assets for the benefit of multiple generations.

It’s not always a good idea to give a significant gift, such as ownership of your home, or a generous sum of money, outright to your adult children, or your grandchildren. What if something happens to you in the future, which means you need access to that money? What if, having signed your house over to your kids, problems in their life such as debt or divorce put your home under threat?

A Family Trust Deed provides the flexibility, control, and protection that you need, to give significant gifts in your lifetime with complete peace of mind.

Here are some examples of how a Family Trust Deed can be a real advantage for you and your family: -

  • It can shield the family’s assets from the consequences of your adult child getting divorced. The assets in the Family Trust would be out of the reach of the divorce court when making a financial settlement.
  • It can keep the family’s assets out of the reach of creditors or the insolvency service if your adult child gets into financial difficulties.
  • If you have family member who is disabled, you can use a Family Trust to give them assets whilst making sure they have all the support they need in managing their money, and you can ensure that their gift isn't swallowed up by the local authority to pay for their care.
  • If you have a child who suffers from an addiction, you can provide them with a gift and make sure it’s looked after for them, so they cannot squander it on feeding their addiction.
  • It can smoothly pass assets down the family line from generation to generation, without the headache of going through probate.
  • It can help you control your exposure to Inheritance Tax - provided you don't continue to benefit personally from the assets you're putting into trust.

How it Works

As the person creating the Family Trust, you are known as the Settlor.

You also appoint yourself, and key members of your family, as Trustees. There can be a maximum of four Trustees. Their job is to hold the Trust’s assets in their name (like the registered keeper of a car) and look after them for your Beneficiaries.

The Beneficiaries would typically be your children and subsequent generations of your family, usually restricted to blood family only. If you're not looking to reduce your Inheritance Tax liability, you can also include yourself and your spouse as Beneficiaries.

You decide what assets go into the Trust. You can transfer assets into the trust when you are setting it up, and you can transfer more assets into the trust whenever you see fit.

Your Trustees have all the same decision-making powers over your assets as if they were full owners. The significant difference, however, is that everything they do and every decision they make must be in the best interests of your Beneficiaries.

Crucially, you retain a lifetime’s right to use and enjoy the Trust’s assets, and the Trustees must treat you as the main beneficiary for your lifetime. This is particularly important if you are transferring your house into the trust because it gives you the right to live on in the house undisturbed for the rest of your life.

The Trust can last for up to 125 years from the date of your death, benefiting multiple generations of your family. However, if there’s a good reason to do so, the Trustees also have the power to break up the Trust and divide the assets equally between the relevant generation of beneficiaries after you have died.

Next Steps

Creating the Trust Deed is the first step in the process of setting up the Trust. Next, you need to transfer assets into the Trust.

If you want to put your home into the Trust, you will need to use a conveyancing solicitor to do this for you. Our colleagues at ACSL Ltd Solicitors can help you with this.

Transferring cash will involve opening a bank account or other investment vehicle in the name of your Trustees. It’s always wise to work closely with your Financial Adviser on this.

Transferring shares will involve executing Share Transfer Forms in favour of your Trustees.

A Family Trust Deed on its own costs £965, and with conveyancing included in the service, the overall budget is £1925.

"Although we didn't think our financial affairs or family arrangements were particularly complicated, Gina talked us through all the things we should consider to ensure what we put in place was right for us and our family. She is clearly very knowledgeable and gave us lots of advice and guidance and explained everything so we understood the implications of our decisions. The paperwork was drawn up quickly and accurately based on our discussions. She also helped my parents with their estate planning. She reviewed their current arrangements and has drawn up lasting Powers of Attorney for them both. Again, everything was explained clearly and sensitively and I know my parents are also very happy with the service they received. I would happily recommend WillWritten to anyone considering making a Will or looking to review their estate planning. "

Amanda Rudham

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