Discretionary trusts can help protect your loved ones inheritance
When it comes to planning for the future and protecting our loved ones, creating a will is an important step. But what happens when we want to ensure that certain beneficiaries are taken care of, even if they aren’t specifically named in the will?
That’s where discretionary will trusts and letters of wishes come in!
A discretionary will trust is a fancy way of saying that the people in charge of your trust (called trustees) have the power to decide how your assets will be distributed among your beneficiaries.
This is a great way of protecting vulnerable beneficiaries, like children or those with special needs, because the trustees can make sure that the inheritance is used in the best interest of the beneficiaries.
Letters of wishes are like a personal note from you to the trustees. It’s a way for you to provide some guidance and instructions for the trustees about how you’d like your assets to be distributed among your beneficiaries. Think of it like a love letter to your future self, or in this case, your loved ones.
One of the best things about discretionary will trusts and letters of wishes is that they provide a level of flexibility. Life is unpredictable and things can change, so it’s important to have something in place that can adapt to those changes. For example, if a beneficiary’s needs change over time, the trustees can adjust the distribution of assets to ensure they are still taken care of.
Another perk is that discretionary will trusts and letters of wishes can offer protection for your beneficiaries from creditors. The assets in the trust are generally protected from creditors and lawsuits, so it’s a great way to ensure that your loved ones are taken care of even in the event of unexpected legal issues.
Lastly, and by no means least in a society where second (and even third) marriages are commonplace, discretionary will trusts and letters of wishes can be a lifesaver for blended families. It can provide a way for parents and other individuals to safeguard the inheritance of all beneficiaries and make sure that no one is left out.
In conclusion, discretionary will trusts and letters of wishes are like a safety net for our loved ones. They provide a level of flexibility, protection from creditors and lawsuits, and a way for parents and other individuals to safeguard the inheritance of vulnerable beneficiaries.
If you’re thinking about creating a will, it’s definitely worth talking to us to see if a discretionary will trust and letter of wishes are right for you.
The Financial Conduct Authority does not regulate Taxation, Trust advice or Will writing.
Trusts are a highly complex area of financial planning.
Information provided and any opinions expressed are for general guidance only and not personal to your circumstances, nor are they intended to provide specific advice.
Tax laws are subject to change and taxation will vary depending on individual circumstances.