Family Succession - Family and Discretionary Trusts

The problem

How can you ensure that as much as possible of your assets pass to your children, your grandchildren and so on?

  • If assets are left, either by will or intestacy, or perhaps from insurance, directly to a beneficiary (for example a spouse or partner) they are then in the ownership of that beneficiary, and are subject to all the risks to which the other assets in their ownership are exposed.

  • If the beneficiary has to go into long term care those assets would be assessed as part of the beneficiary’s assets and would almost certainly be required to be used to pay for that care.

  • If a spouse remarries after their spouse’s death, the survivor’s assets then become assets of the new marriage. The survivor may feel the need to make a new will; there may be children of the new marriage; there may be a divorce. In all these examples the deceased’s assets are likely be at significant risk.

  • If a beneficiary becomes bankrupt their entire inheritance may be lost.

  • When a beneficiary’s inheritance is passed following their death it may be subject to Inheritance Tax again and be further diluted.

In all these examples the objective of making your assets available for the benefit of your children, your grandchildren and so on would not have been achieved.

Blood line planning

People’s concerns over family succession are sometimes dealt with by what is known as ‘blood line’ planning.

YourWill can advise on the structure of the family and discretionary trusts needed in conjunction with your will and the strategy to optimise blood line issues for your family’s benefit, and without prejudicing the welfare of your immediate survivors.

A special case, where careful planning is needed, can arise in business where, for example, there are two partners and should one die the deceased’s family (and the surviving partner) can have their potential inheritance at significant risk. The solution usually involves cross option agreements, insurance and trusts.

YourWill can help provide professional assistance to administer family and discretionary trusts and particularly to keep their tax implications under review. Contact YourWill today and find out more.