The correct will and death planning, including the use of trusts, can ensure you have the most tax efficient planning and can also protect your chosen beneficiaries from several 3rd party threats.
Multiple trusts could be considered to provide autonomy to your chosen beneficiaries, so they can be in control of their ‘own’ trust.
Asset Protection Trusts
Asset protection trusts are fairly commonplace where assets are transferred to trust in your lifetime but you still benefit from the trust. ‘Probate’ trusts can be useful to avoid probate delays in certain circumstances. Probate trusts can be useful to avoid Office of the Public Guardian (OPG) restrictions when acting under Power of Attorney. Holding assets in trust can ensure that they do not add to your beneficiaries’ estates and impact on their own IHT. Holding assets in trust can ensure that, if your children/chosen beneficiaries were subject to divorce proceedings, what you intended them to receive could be better protected from divorce settlements. If your children/chosen beneficiaries are subject to creditor claims/bankruptcy, the trust could provide more protection from such claims. Probate trusts can be useful to avoid 3rd party threats in certain circumstances, albeit deliberate deprivation must always be considered and success cannot be guaranteed.
Probate trusts are not used for Inheritance Tax (IHT) advantages, because the person who transfers assets to them continues to benefit. For IHT mitigation, lifetime planning could be considered.
Investment Trusts can also be set up during your lifetime, by opening a Trustee bank account and appointing professional Trustees, it is possible for financial investments to be held within the Trust.