What is a Will Trust?

A Will Trust is an arrangement in your Will which places assets in the control of named persons (called trustees) on behalf of other persons (called beneficiaries). There will be terms or “conditions” on how the trust operates which will be set out in the Will.

Key takeaways

• A Will Trust is an arrangement in your Will which places assets in the control of named persons called trustees on behalf of other persons called beneficiaries.
• There are many different types of trusts that can be included as part of your Will.
• Will Trusts can be tailored to meet the particular needs of you and your estate.

What are the main types of Will Trusts?

There are many different types of trusts that can be included as part of your Will. Here are some of the most common trusts and their benefits:

Bare Trust

A Bare Trust is created when money is left to children or grandchildren, but you die before they turn 18. It gives them the right to anything they inherit in the trust, plus any income gained over time – from bank interest, for example.

The money will be held in the name of a trustee. You can choose who you want this to be when you write your Will.

When your beneficiary turns 18, your trustee can transfer the trust fund into their name, allowing them to access their inheritance.

A fixed-interest Trust

By default, any beneficiaries who are children will inherit when they turn 18. With a fixed-interest contingent trust, you can increase this age to 21, 25 or higher if you wish. You can make this type of trust if you’re satisfied the beneficiary will be capable of managing the inheritance on their own, when they reached the desired age.

Life-interest trust

A life-interest trust is a slightly more complex trust that lets you leave money and property to someone for their lifetime. This is usually the partner of the person creating the trust, otherwise known as the “life tenant.” The assets would then pass to your beneficiaries after the life tenant dies, such as your children or grandchildren.

In most cases, if the main asset is a property, the life tenant continues living in the house and they may also be entitled to any income the trust receives, if the assets are liquid in nature. This usually comes from bank interest or ongoing income from a business or rental property. But the value in the asset placed in trust is protected (otherwise known as “the capital”).

Discretionary trust

A discretionary trust allows your trustees to choose how the money is shared out between a number of beneficiaries, or beneficiary. The Trustees have total control of the funds and they make the decision as to when/whether a beneficiary should receive funds. This could be based on which beneficiaries need the most support, or simply to make sure they get the money when they need it most.

Who can be a beneficiary of a Will Trust?

Anyone can be a beneficiary. They might be:

• A named individual
• A class of people, such as “my grandchildren and their descendants”
• A charity, or a number of charities
• Any other organisation, such as a company or sports club

What can a Will Trust be used for?

Will trusts can be tailored to meet the particular needs of you and your estate. Some uses might include:

• Provide income or property for your second spouse during their lifetime, ensuring the assets then pass to the children from your first marriage after their death
• Fund education for your children and grandchildren
• Provide for vulnerable loved ones who may not be able to manage the inheritance on their own
• Protect the eligibility of a beneficiary who is in receipt of means-tested benefits.

How can we help

Making provisions for yourself and your family can give you real peace of mind. This is where a trust can be beneficial for securing your future.

At OMM we are regularly nominated as the Will Trust’s Trustee for clients who prefer that such a Trust should be professionally managed, or where family/friends are not suitable or available to perform this function.

Our team of dedicated Will Trust experts can help you make the best provisions for you and your family in the future, and will support and guide you through the Trust planning process. Get in touch with the team to find out more on 01525 378177 or email info@ommlaw.co.uk.