As parents, ensuring the well-being and security of our children is paramount. It is essential to consider estate and succession planning as a safeguard for their future. Trusts and Wills are invaluable tools in this endeavour, offering parents peace of mind, and children a solid foundation for financial security and stability.
The benefits of Trusts for the protection of children/minor beneficiaries
The responsibility of Trustees
Trustees have legal responsibility for the Trust’s management and administration. They must make balanced and adequately informed decisions, always acting in the best interests of the Beneficiaries.
Asset protection
Trusts provide a robust mechanism for safeguarding assets earmarked for minor, vulnerable or financially immature Beneficiaries. Trustees have a duty to ensure that the Trust Fund is secure and properly invested. Placing assets in Trust can also help shield parental assets from second marriages and divorce.
Controlled distribution
Trusts allow parents to set out provisions for the Trustees to follow to ensure the timing and conditions under which assets are distributed to the Beneficiaries. This can be particularly useful in cases where a Beneficiary may not yet possess the financial maturity to manage a large inheritance responsibly.
Education funding
Trusts can be structured to allow the release of funds for the educational needs of minor Beneficiaries, including tuition, books, and other expenses associated with higher education. This ensures that Trustees are able to provide funds from the Trust in order for Beneficiaries to access quality education without the risk of an outright gift being spent irresponsibly by the Beneficiary.
Tax planning
Trusts can be used as a tax planning vehicle with potential to minimise estate taxes and maximise the overall value of the inheritance. This requires careful thought and expert advice so that a Trust can be considered against other Tax Planning options such as outright gifts.
The benefits of Wills for the protection of children/minor beneficiaries
Guardians
Wills enable parents to set out their wishes as to who they would like to be Guardians for their children in the event of both parents’ death. This ensures continuity of care and stability for children during times of upheaval.
Executors
Wills enable parents to set out their wishes as to who should act as Executor/s of their Estate. Executors are legally responsible for the administration of the Estate and can potentially become personally liable for any losses suffered. It is therefore important to appoint responsible and trustworthy Executors, so that Beneficiaries’ interests are protected throughout the probate process.
Testamentary trusts
Wills can establish testamentary trusts, which come into effect on death, providing ongoing asset management and protection for Beneficiaries. As with a lifetime Trust, a Testamentary/Will Trust can help to ensure that minor Beneficiaries receive their inheritance in a controlled and responsible manner. A Will Trust can appoint the Executors as Trustees, or separate Trustees can be appointed within the Will.
What are the advantages of estate and succession planning
By undertaking estate and succession planning including the use of Wills and Trusts, parents can create a comprehensive estate plan that can address both the immediate and long-term needs of their minor children. This can enable parents to protect assets, provide for guardianship, cover education costs, and ensure the responsible management of inheritances, thereby laying the groundwork for minor Beneficiaries’ financial security.
By taking proactive steps to address these important considerations during their lifetime, parents can rest assured knowing that they have the necessary plans in place, so that their children are financially supported during their childhood, and that their financial wellbeing is protected while they navigate the complexities of young adulthood, should their parents not be around to support them.
How Moore Barlow can help
Our team of Private legal professionals will be happy to assist with any enquiries or guidance you may need regarding estate and succession planning, Trusts and Wills. To discuss please contact the Private wealth team on 02380 718 000, or email naomi.wilkes@moorebarlow.com.
