If you have young children (under 18) who you wish to provide for in the event that you (and your partner, if you have one) pass away, then we will include in your Will(s) an Accumulation & Maintenance Trust. The Trustees appointed by you can then provide your nominated children’s Guardian(s) with sufficient funds to care for your children until they reach 18 when they will inherit. You may choose a later age at which they should inherit although, from April 2006, if your child is not disabled there may be additional taxes to pay on the trust fund, subject to the amount held in the trust fund.

Although not exclusively, a Discretionary Trust is often used by families who have a relative with a learning disability. Discretionary trusts are a way of putting in place financial arrangements to help support that relative. A Discretionary Trust can also provide a way of owning property. Sometimes families decide that in the long-term they would like to be able to set up arrangements that allow their relative to continue to live at home with the necessary support. This is known as a life interest.  

In summary, Discretionary Trusts are used as a way of: 

1. Paying for the things the statutory services may not be able to give, for example a holiday, a new coat or even additional care.  

1. As a means of owning, managing and maintaining a property. As a way of arranging an inheritance so there is a way of managing money or other assets.  

1. To avoid benefits and care funding being stopped. For example, Income Support and Housing Benefit can be affected. Payments of these benefits can stop being paid if a person has more than a certain amount of money. Benefits are withdrawn or reduced until savings fall below the relevant level for the benefit. If Social Services fund a residential care home or care package they may also begin to charge for the care service or stop funding it. A Discretionary Trust can avoid this. 

Trustees have discretion as to how the assets are used. The trustees are free to make all the decisions. The person to benefit from the Trust must not have a right to the income or capital. The intended beneficiary must not be the only person named in the Trust i.e. must not be the ‘sole’ beneficiary. Without these features the Discretionary Trust is not properly constituted and the person may be treated as though they own the house or have the money.  

If you want to make some financial provision for a close relative who is dependent on welfare benefits and/or supported by Social Services do not say in your Will, “I hereby leave my worldly goods to x”. This will not provide a long-term nest egg. Consider instead including in your Will a Discretionary Trust – ask your Portcullis Will Specialist for further details. 

It is illegal to deliberately transfer your own property to relatives or trusts if your prime motive is to avoid paying long-term care costs. However, it is not illegal for you and your partner to each make a provision in a Will, that upon the first death, the deceased’s half-share of the family assets and/or home, is placed in trust for their children or other beneficiaries, instead of passing direct to the surviving partner.  

The Protective Property Trust Will has been specially designed for this purpose. It keeps the assets and/or share of the home owned by the deceased partner away from the reach of third parties, while at the same time allowing the surviving partner to continue benefiting from the assets and/or share of the home within the trust. On their death the assets and/or share of the home owned by the trust together with whatever is left of the assets of the second partner can be given to the surviving family. 

If the value of your Estate after payment of your debts and any gifts to your husband or wife or to charity is worth more than £325,000 (2022/23 tax year), then Inheritance Tax will be payable at 40% on the value over this amount. However, if when you die you are a widow/widower or bereaved civil partner your allowance is £650,000. There is also a Residential Nil Rate Band additional allowance to be considered of £175,000 per person, as long as lineal descendants are intended beneficiaries. We can talk this through with clients on an individual basis. The information provided is of a general nature. if you wish to receive individual advice then we suggest you seek the advice of an independent financial adviser. Portcullis will be happy to refer you to one if you wish.

A gift is free of tax when any Inheritance Tax, if it is payable, is to be paid out of your Residuary Estate and not to be deducted from the gift itself. When instructing Portcullis to draft your Will you can specify which gifts, if any, you would like to be subject to tax. All gifts to charities are by law totally exempt of Inheritance Tax.

If your responsibilities are “divided”, e.g. you wish to ensure that your partner is adequately provided for but feel you have a duty towards, say, children from an earlier marriage, then you may wish to consider giving your partner a “life interest” in your Estate. This restricts the partner’s inheritance to the income (interest earned) on your capital or specified sum. If you own your home outright or own a share as tenants-in-common then you may also wish to give your partner the right to live in your home rent free until they die, remarry or for only, say, a specified period. Once they die or after the specified event has taken place then your home and/or the capital sum will pass to whoever you have specified in your Will, such as your children.  

You should, however, bear in mind that unless your Estate is fairly large, the income from it may be insufficient to support your partner. A gift of a life interest also causes the duties of the Executors and Trustees to be more onerous. When considering a gift of a life interest, it is very important to remember that the recipient does not own the property or capital sum and therefore cannot dispose of it in his or her own Will. It is also important to remember that the prime duty of your appointed Trustees is to keep a fair balance between income for the person getting a life interest and capital growth for those who will be ultimately entitled to your Residuary Estate. 

Trustees are the people appointed to look after your assets in the trust for the benefit of the beneficiaries, for example until a child is old enough to inherit. Usually Executors and Trustees are the same people. Trustees can be other family members, friends or professionals.

People who co-own a property hold it either as “joint tenants” or as “tenants-in-common”. Husbands and wives are usually, but not always, joint-tenants. This means that when one of them dies the other one automatically becomes the owner of the whole of the property. If you own property as a joint tenant, you cannot gift your share of the property in your Will. Partners who have been married before often prefer to own the property as tenants-in-common. This means that when one of them dies his or her interest in the property forms part of his or her Estate. They can separately make a gift in their Will of their share of the property, perhaps to their own children from a previous marriage. If you own your property as joint tenants, but would like to own it as tenants in common, Portcullis can arrange this for you and arrange the relevant changes to your deeds. If you don’t know whether you are joint-tenants or tenants-in-common, you can also instruct us to find out for you. These principles also apply to other jointly owned assets such as bank and building society accounts and other investments.

This is the most common question we are asked by customers of all ages! In short, if you have left everything to your partner in a Will or you jointly own the house, or any other asset with them, the survivor receives what you leave them in a Will or the asset you jointly owned with them. However, what if you want to ensure your children from this relationship or indeed a previous relationship inherit your share of the house for example? If you have left it to your surviving partner and they then meet a new partner, how can you guarantee that your children will get your share? This is why you need to be talking to us about trusts planning.