Asset Protection Trusts
Irrespective of the source of a person’s wealth, most people want to protect what they have from any and all forms of attack. Depending upon the person, those sources of potential attack will differ. It could be a future ex-spouse, a current spouse’s new future spouse, it could be a business partner, an aggrieved client or customer, an authority or any one of many other things. Understandably, those who possess some degree of what might be termed wealth, want to protect it to ensure that all their assets will ultimately pass to their children or other chosen beneficiaries and cannot be eroded by any means either before or after their demise.
Let us take for example the case of a current spouse’s new future spouse...
Tom and Lucy have been married for 20 years. They have two children, Sam and Mike. Lucy had done well in the fashion business, while Tom had been looking after the children, and between them they had accumulated a house worth £600,000 and savings and investments of £300,000. Lucy dies and leaves everything to her husband, Tom – this is not at all unusual. Some time later Tom marries again, to Mandy who has two children of her own, Jane and Cindy. The years pass and Tom dies, leaving everything to Mandy. When Mandy dies, Sam and Mike find they have only been left two very small pecuniary bequests and that the bulk of the estate has passed to her own children, Jane and Cindy. The net result of this is that Lucy’s children have got almost nothing from all Lucy’s hard work.
This could all have been so easily avoided, without any detriment to Tom, by simply using trusts and yet there are countless examples of situations the same as, or similar to, this happening every day purely because people either don’t know or just don’t think how such things can be avoided.
The use trust structures for estate planning can solve all these problems and also give comfort to clients who are concerned about the necessity to obtain a Grant of Probate following death and the cost and possible delay involved which can be avoided if a Trust is used. Another consequence of using this trust for estate planning purpose is that assets held within the Trust can be protected from the impact of long term care fees in certain circumstances.
Throughout your lifetime, you can retain full benefit from all of the assets within the trust - although you don’t retain ownership otherwise it wouldn’t work. You can continue to live in your property, drive your car and look at the paintings on your walls, even though you technically don’t own any of them.
Summary of Benefits of Asset Protection Trust:
Probate will not be needed for the assets in the trust;
Property can be passed on after your death without delay if desired;
You can control who inherits joint assets in the event of the survivor of you remarrying after your death;
Assets can be dealt with by those you trust in the event of your incapacity;
You retain full benefit of your Assets until your death or incapacity.