How Trusts Can Help You to Provide for Dependents After Your Death

If you’re currently going through the process of writing a Will, the necessity of safeguarding your dependents’ future is probably foremost in your mind. Whatever your personal circumstances look like, there are likely to be people you’d be keen to provide for in the event of your death. This could be spouse or partner, children, stepchildren, or another vulnerable family member. 

At the heart of the act of making a Will is the intention to protect your loved ones. A valid Will can make things a great deal more straightforward in the period after a death. It can also ensure that you get to dictate who benefits from your Will, rather than leaving your estate at the mercy of the intestacy laws. 

In some situations, a Will might be a very simple exercise in nominating which of your loved ones you would wish to benefit from your estate. However, there are plenty of circumstances where simply handing over any and all assets at the time of your death might not be appropriate.

In situations like these, working with a solicitor to establish one or more trusts in your Will could be very beneficial. A solicitor with experience in estate and probate law will be able to talk you through all your options, but, in the meantime, the examples below will give you a good idea of what might be possible.

Using a trust to protect dependents who have not yet come of age

If you wish your estate to pass on to your children in the event of your death, how this will be managed will depend on the age of your children. If they were not yet adults at the time of the death, they would not be able to take on the full legal ownership of the contents of your bank accounts, or of any property, stocks or shares. 

In situations like these, a trust would enable you to appoint someone to be legally responsible for holding and taking care of assets until your children came of age. A bare trust would typically be the most appropriate mechanism to use here. This is a very simple type of trust in which the beneficiaries have an absolute right over whatever it contains.

Your solicitor would be able to work with you to decide the terms of the trust, including how the assets should be handled on behalf of the beneficiaries, and how old the beneficiaries would need to be before they could take over full ownership themselves. 

Using a trust to ensure a partner can stay in their home, whilst still ring-fencing your children’s inheritance

Arrangements for your estate can be made more complicated if you have remarried or have a blended family. This is because it can create some tension between your desire to provide for your current spouse/civil partner/partner and your desire to provide for any children you may have from a previous relationship. 

According to the intestacy laws, your spouse or civil partner would be entitled to inherit the majority of your estate, prioritising them over and above any children. This may be less of an issue for you if your children are also your current spouse/civil partner’s children, but if they aren’t, leaving your estate subject to the intestacy laws could result in unintentionally disinheriting your children.

One way around this is to incorporate a life interest trust into your Will. This would enable you to leave certain assets (often property) to your spouse/civil partner/partner for them to benefit from during their lifetime, whilst still ensuring that they would ultimately pass to your chosen beneficiaries (e.g. your children). 

For example, a life interest trust like this would enable you to leave your spouse/civil partner/partner the right to continue to live in your shared home for the remainder of their life, safe in the knowledge that on their death, full ownership of the property would revert to your children. 

Using a trust to safeguard the interests of a dependent who may not be able to manage their own finances

There are all sorts of reasons why it might not be appropriate to leave a lump sum to your beneficiaries in your Will. For example, there may be circumstances that make your dependents unable to manage their own money, such as a learning disability, an addiction disorder, a significant mental health condition or even a history of bankruptcy. 

In a situation like this, you might feel that you would be better able to provide for that dependent by making them the beneficiary of a discretionary trust. This would enable you to appoint a trustee who would manage the assets held in the trust for the benefit of the dependent in question. Though the beneficiary would not have the ultimate right to everything held in the trust as they would in a bare trust, the trustee would be able to make funds available to care for them at their discretion. 

Your solicitor would be able to advise you on how this would work, as well as ensuring the trust was set up in a way that would be most suitable in the circumstances.

Where can you get support with trusts?

Trusts can be a complex area of the law. If this is something you would like to explore, we’d recommend seeking specialist professional advice on how the scenarios above could relate to your personal circumstances. Our solicitors have a great deal of experience both with writing Wills, and establishing and managing trusts, and we are always pleased to hear from you.

FAQs

What is a bare trust?

A bare trust is the simplest kind of trust mechanism. It allows you to set aside an asset or a collection of assets to be held by a trustee for the benefit of one or more beneficiaries. This type of trust is often utilised to manage assets on behalf of children. 

What is a life interest trust?

A life interest trust is a kind of trust mechanism that is often used in wills. It allows the person who is making a Will to leave the use of a certain asset to one individual for the duration of their lifetime, whilst ultimately ensuring that full ownership of the asset would pass to the final beneficiary on that first individual’s death. 

What is a discretionary trust?

A discretionary trust is a type of trust in which the trustees can choose to release funds to beneficiaries at their own discretion. In this type of trust, beneficiaries do not have an automatic right to the assets in the trust. Discretionary trusts can be used to hold funds that are intended for a certain purpose, such as a fund for any future grandchildren who choose to seek a university education.  

How do you set up a trust in a Will?

If you are considering including a trust in your Will, it’s important to seek professional advice. An experienced private client solicitor will be able to advise you on which kind of trust is most suitable in your circumstances, and how best to set it up. 

Should you put a trust in your Will?

Whether or not you should put a trust in your Will depends on what you would like to happen to your estate in the event of your death. It will also depend on your personal circumstances and the personal circumstances of the individuals you would wish to name as beneficiaries. A specialist solicitor will be able to help you consider all available options.