Many people want to make a gift to family members but they are concerned that the money will pass outside of the family if the recipient should die, divorce, go bankrupt or become unable to manage their affairs.
By making an absolute gift to someone there is the risk that the gift may pass to someone who you do not wish to benefit.
However, there is another way. Establishing a trust can help protect family wealth for the next generation, or provide a benefit for someone who is unable to manage their own affairs.
A ‘trust’ is an arrangement where people hold assets for the benefit of others. You appoint trustees to have control of the funds and they will manage it in accordance with the terms of the trust deed. A trust can be used to reduce the size of your estate whilst placing a wrapper over your wealth to protect it from passing outside of the family.
For example, Mrs. Smith gives £50,000 to her son John. If John passes away, then the gift passes to his spouse under the terms of his will.
By comparison, if the gift is placed into a trust, then John’s spouse would have no right to the money and it could pass to other people that Mrs Smith wants to benefit.
There are many types of trusts and they can be specifically tailored to suit your requirements. For more information on trusts and how they can work for your family please contact a member of the Wills, Trust and Probate department at AWB Charlesworth Solicitors Limited.
Jenny Barron, head of the department, can be contacted by telephone on 01756 692866 or by email at jenny.barron@awbclaw.co.uk.
1 November 2022
