How Trusts Can Protect Your Assets From The Worst – What You Can And Can’t Do

Do trust funds protect assets? Our assets are the things we’ve usually worked hard for throughout our lives, from our property to our finances and valuable possessions. There are several situations you could find yourself in which would put your assets at risk; however there are means by which you could protect them for your future and your family. Here we will look at some situations where a trust can help protect your assets, and debunk some common myths.

You Can Use A Trust To Assist In Inheritance Processes

By placing your assets into a trust, not only will this speed up the process of inheritance upon your death but it can dramatically decrease, or even completely avoid the tax to be paid on the inheritance. That is, if it’s done correctly. By placing your assets including property and finances into a trust, this means that technically you are not the owner of these assets.

They have been placed into the ownership of your appointed trustee and as such, when you die, will not be taken into account when calculating the tax bill which must be paid.

In order to minimise the impact of inheritance tax on your estate after you die, it’s important you seek professional advice to ensure it’s done correctly. Trust law can be extremely complicated and having a good knowledge of tax regulations and some careful planning is imperative when setting up any type of trust.

As well as assisting with the tax levied on your assets, it can also help speed up the inheritance process for your beneficiaries. When you die, your will needs to be executed and it can sometimes take a while for your assets to be distributed to your beneficiaries. By using a trust, any finances or property held within the trust can be released to the beneficiaries much quicker, which can be really helpful in supporting your family and loved ones during that difficult time.

You Can’t Use a Trust to Avoid Debts and Bankruptcy

Although placing your assets in a trust can give them some protection, there are some circumstances where this can be legally overruled. One example is when you have creditors who are seeking to recoup money from you, or you have filed for bankruptcy. Placing money and property within a trust doesn’t “hide” them if you have created the trust yourself and deposited within it.

If you are taken to court by a creditor or you file for bankruptcy, anything you have deposited within a trust will likely be considered as part of your estate and therefore can be taken into consideration when determining a settlement or payment plan.

You Can Continue To Access Assets Within The Trust

It’s a common worry that once your assets are placed within a trust, that you won’t be able to benefit from them anymore. This however isn’t necessarily the case and it’s perfectly legal to name yourself as the trustee, giving you full control over the trust, or name yourself as a co-trustee if you’d like to have someone else serve with you. It’s all down to the type of trust you create and the guidelines you build into the trust for how it is managed.

Living trusts are much more flexible in how they work and can be designed to be changeable to fit to your circumstances. For example, if you wish to sell a property within a trust this is perfectly possible, or whether you need to access funds due to unforeseen circumstances. Simply ensure that your trust has been created to suit you needs and takes any future possibilities into account and you can benefit from the protection a trust provides, whilst still having control its contents.

You Can Leave A Trust In Your Will To Control Your Assets After Death

If you have children under 18, or have other reasons for wishing to restrict who inherits your assets, you can include a trust within your will. This will be created upon your death and be bound by the guidelines you include.

This is useful if there are minors who you wish to inherit from your will, someone who isn’t able to manage the finances themselves or you simply wish to ensure someone is discounted from the line of inheritance. For example, your child may marry someone whom you don’t wish to inherit your estate should anything happen to child, instead having your assets passing to your grandchildren instead.

Using this method, you can then have control over who inherits and when, protecting your finances and property from being inherited from outside your family. You can set out rules within your trust, should this be at a certain age or when other specific requirements are met. It can also include what the funds are used for, for example a university fund.