Intergenerational wealth preservation and succession planning are always hot topics when we speak with clients. The ability to protect your estate for the benefit of your family is always a key planning priority. Estate planning ensures that no beneficiaries go without, whilst enabling protection from the external factors which impact intergenerational wealth transfer. That is why you should consider setting up trusts for the ones you love.
A Trust is a legal arrangement where you give cash, property, or investments to someone else to look after for the benefit of a third person. This can be done during a lifetime or following death and has a number of variants, depending on your wishes, assets, and circumstances.
Although using a Will to distribute your estate and direct gifting are both effective, they may not actually be the most suitable vehicle of wealth transfer without some additional protection. Clients may not want to gift directly into the estate of a beneficiary for many reasons, ranging from age and incapacity to concerns surrounding sideways disinheritance.
The potential for divorce and the desire not to see hard-earned money go off to an ex-partner, who your child no longer chooses to live with, has seen an increase in Trust uptake.
Similarly, the erosion of family wealth due to later life second marriages, given the automatic revocation of previous Wills and its’ beneficiaries, also adds concerns as any new spouse will receive the inheritance under Intestacy Rules.
Issues like these can be avoided through the implementation of effective Trust planning. For instance, by including a Life Interest Trust in a Will, assets can be accessed by the surviving spouse but do not fall into their estate. These provisions allow them to live in a property and benefit from an income for the rest of their lifetime, but ensuring the asset passes to your heirs after their demise.
There are many other strategies that can also protect your estate from the unwelcome side effects of marriages and their breakups. However, it is important to have professional help in working out the best course of action.
If you think you would benefit from having a look at your estate planning, or know of somebody who might benefit, then please get in touch with us and one of our Wealth Strategists would be pleased to speak with you.