How trusts can prevent loss of benefit payments and care packages

Trusts are almost always used as a means of making a gift of cash or assets – including shares in the family business – with certain conditions applied that are important to the asset owner. For example, giving someone dividends on shares while retaining ownership of the underlying shares. However they can also be used to ensure that Care packages and Benefit Payments, especially for vulnerable beneficiaries, remain unaffected as assets will not be DIRECTLY inherited by beneficiaries but managed on their behalf by your chosen Trustees.

During your lifetime you can be a Trustee of the trust that you have created, thus able to control and manage Trust assets to ensure they remain protected from beneficiaries divorce, bankruptcy and future Care costs.

Placing an asset in trust can be effective for Inheritance Tax mitigation if you then survive for a period of seven years and assuming that you do not derive any benefit from the trust asset(s).

One must also consider the capital gains tax (CGT) implications of any asset transferred into trust. Even where there is no consideration paid by the trust for the asset, this will still be an event for CGT purposes. Where the asset stands at a gain then in some circumstances the gain can be deferred (or ‘held over’), thus there is no immediate liability.

A Will is arguably the most basic – and obvious – of planning tools but making a specialist Will is one of the most effective methods of protecting your assets upon death.