FAQs

Below are some FAQs we receive about trusts and setting up a trust, if there is anything you are unsure about or if you have a questions not covered below, please don't hesitate to contact us.

1. What is a loan trust?
2. Does my Will not stipulate who gets my money?
3. Why should I consider trusts?
4. How wil Inheritance tax affect the value of my estate?
5. I'm still relatively young, can I postpone IHT planning for a few years?
6. How long do I need to live abroad before I lose my U.K. domicile?
7. What if my circumstances change or I change my mind?
8. Who could get hold of my assets if I don't properly prepare my estate?
9. So, with a trust I can say who gets my assets and when?
10. What else do I need to know?
11. If my estate is worth less than the IHT exemption Level, does that mean I avoid IHT completely?

1. What is a loan trust?
A. A loan trust is type of trust suitable for individuals seeking to do some IHT planning but who do not want to give away their capital. The loan trust allows the settlor to lend an amount of capital to trustees. The trustees then invest the loan. The settlor can demand repayment of the loan at any time and repayments are usually made by way of regular withdrawals. Any investment earnings on the trust assets belong to the trustees and are automatically outside of the Settlor's estate for UK IHT tax purposes.

Main features

• Suitable where the Settlor is not ready to make a gift of capital but is an effective start to inheritance tax planning.
• The Settlor has full access to their capital at any time.
• The Settlor has the flexibility to start and stop loan repayments.
• The loan repayments will come back into the client's estate and can be spent or gifted within annual allowances to reduce the Settlor's estate.

You might use this Trust if...

• You wish to start inheritance planning that will help to mitigate IHT liability on your death.
• You may need to have access to your capital at some time in the foreseeable future.
• You may wish to have a regular income from the Trust, either to spend or gift.

2. Does my will not stipulate who gets my money?
A. Not necessarily. In some circumstances your assets may not be able to go to the persons you set out, even though you have written a will.

3. Why should I consider trusts?
A. Our Trust range can provide you with a number of opportunities to enhance the effectiveness of your financial planning and help to protect your wealth. It is not surprising that an increasing number of people are now taking advantage of the many benefits that such Trusts offer.

4. How will inheritance tax affect the value of my estate?
A. This is a question that deserves some serious thought. The reality is that; unless you take appropriate action, the IHT net can spread over a surprisingly wide area and seriously undermine the ultimate value of your legacy.Fortunately, with the right advice and some careful forward planning, your estate's IHT liabilities can be kept to a minimum, giving you the peace of mind that comes from knowing future generations will receive the maximum benefit from your bequeathed savings, property and other assets.

5. I'm still relatively young, can I postpone IHT planning for a few years?
A. It is best to start planning for IHT as soon as you can if you wish to mitigate your future IHT liability. Establishing a Trust now could allow you to make the most of the opportunities it offers, given that some IHT advantages are only fully realised after seven years have elapsed. This does not mean that your plans are fixed as Trusts can adapt to changes in your circumstances.

6. How long do I need to live abroad before I lose my U.K. domicile?
A. Even if you have worked and lived outside the UK for many years, the UK may be considered your 'home' country (known as your 'domicile'). If so, the Inland Revenue will include the value of not only your UK assets but also your worldwide assets in calculating the worth of your estate for IHT purposes. By establishing a Trust, you can potentially take wealth out of your estate so that it is not included in your UK IHT calculation.

7. What if my circumstances change or I change my mind?
If your views or circumstances change you can change the Trustees, the named Beneficiaries and/or how your assets are split. With certain Trusts, you can even have access to your capital on an infrequent or regular basis.

8. Who could get hold of my assets if I don't properly prepare my estate?
A. Well, for one, there is the taxman - trusts can defer or, in certain circumstances, remove certain tax liabilities, including inheritance tax. Then there is what is known as 'forced heirship'. The law in certain countries can dictate the recipients of some of your assets when you die and how they are divided. A trust, where you can choose your beneficiaries, may help avoid this and ensure that your assets are distributed in accordance with your wishes.

9. So, with a trust I can say who gets my assets and when?
A. A trust allows you to determine how your assets are distributed in the future, something that is particularly useful if some of your intended beneficiaries are currently minors, or if you have concerns about family circumstances. A further advantage of putting your money into trust is that, on death, matters can be settled quickly and delays avoided, such as those that can arise in obtaining a grant of probate or letter of administration.

10. What else do I need to know?
A. Choosing the right Trust There are different types of Trusts, each with their own particular features and benefits. Your Financial Adviser can help you identify which Trusts vehicle is best suited to your specific needs.

11. If my estate is worth less than the IHT exemption Level, does that mean I avoid IHT completely?
A. Not necessarily, as this greatly depends upon your personal circumstances. For more information contact one of our personal advisors.