This means the assets that the settlor has set aside will always go directly to the intended beneficiary. Bare trusts are often used to pass assets to young people. The trustees look after them until the beneficiary is old enough.
2. Interest in possession trusts
These are trusts where the trustee must pass on all trust income to the beneficiary as it arises, less any expenses.
3. Discretionary trusts
Trustees can make decisions about the way trust income and sometimes capital is used. Depending on the trust deed, trustees can decide:
- who to make payments to
- what gets paid out – income or capital
- frequency of payments
- conditions imposed on beneficiaries.
Discretionary trusts can be used to put assets aside for:
- a future need, such as a potential beneficiary such as a grandchild not yet born
- beneficiaries who do not have the capacity to look after themselves financially.
4. Accumulation trusts
This is where the trustees can accumulate income within the trust and add it to the trust’s capital. They may also be able to pay income out, as with discretionary trusts.
5. Mixed trusts
These are a combination of more than one type of trust. The different parts of the trust are treated according to the tax rules that apply to each part.
6. Settlor-interested trusts
These are where the settlor or their spouse or civil partner benefits from the trust. The trust could be:
- an interest in possession trust
- an accumulation trust
- a discretionary trust.
Wills
It’s important that clients understand the benefits of a valid will and the risks of not having one. If the client has no will, then you should recommend they seek professional advice from a solicitor or will writing service.
To make a valid will, two formalities must be followed: the will must be in writing and be properly executed.
The minimum age for making a valid will under English law is 18. It should be a clear and unambiguous statement of the deceased’s wishes in respect of their estate and must be signed by the testator in the presence of two witnesses.
The witnesses must not be beneficiaries of the will or the spouses of beneficiaries. If a beneficiary were to be a witness, they would not be able to inherit under the terms of the will.
The terms of a will only take effect on the death of the testator. Before then, the testator can revoke or modify the will at any time. Modifications are recorded in a document known as a codicil. In the event of marriage, remarriage or entering into a civil partnership, a will is automatically revoked, unless specifically written in contemplation of the change of status.
Powers of Attorney
