What is a Family Protection Trust
A Jones Whyte Family Protection Trust is a type of Discretionary Trust that is set up by an individual during their lifetime in order to protect their assets and simplify administration upon death.
Assets such as properties, investments and cash can be placed into the Trust up to a value of £325,000 without attracting tax.
What are the advantages of a Family Protection Trust?
The main advantage of a Family Protection Trust is that your assets do not require Confirmation (Scotland) or Probate (England and Wales) when you die. When an asset is transferred into a Family Protection Trust, the Trustees of the Trust are the new legal owners of the assets and they therefore have the authority to deal with the assets when you pass away without the need to apply for Confirmation or Probate. The Trustees will hold the assets in Trust for the Beneficiaries as per the wishes of the Settlor (you).
Another major advantage of a Family Protection Trust is that it provides flexibility for your beneficiaries when you pass away. Unlike a simple Will whereby the Executors are obligated to administer the Estate and distribute assets to beneficiaries in accordance with your Will, a Family Protection Trust offers protection for vulnerable beneficiaries who may not benefit from receiving a large sum of money from your estate. If any beneficiaries have any form of addiction, receiving a large sum of funds from the asset may compound matters further. Instead, the Trustees may consider leaving the assets in Trust or distributing assets on an instalment basis
Who can I appoint as Trustees to ensure my assets are safe?
There are a few different options you can consider when appointing a Trustee.
- You can appoint yourself as a Trustee of your Trust so you still have an element of control of the assets. You would then be the legal owner of the asset as a Trustee as opposed to it being in your sole name.
- You can appoint Family Member Trustees such as a spouse, children, aunties, uncles, the list goes on. You can also appoint friends or neighbours if you wish.
- You can appoint a professional Trust Corporation as a Trustee.
You do not simply have to pick one of the above options, you can also have a mixture of the above. For example, you can appoint yourself along with a Family Member Trustee or a Trust Corporation.
A Trustee must be at least 18 years of age and have fully capacity to act. All Trustees should take independent legal advice before signing any documentation to become a Trustee.
What happens if I want to change my Trustees?
Changing Trustees on your Trust is a simple process which is done through a deed called a Deed of Assumption and Resignation.
Depending on the assets that are held in Trust, you may also need to update the Trustees with third parties. For example, in England and Wales, if a property is held in Trust, you are required to update the legal title of the property to reflect the new Trustees. This is done through a Transfer of Title and you will require a solicitor for this. If investments are held in Trust, you need to update the policy provider with the new Trustees.
What happens if I want to create a Jones Whyte Family Protection Trust but I own my property with my spouse?
There are different ways to approach this. If the property is held jointly by yourself and your spouse, you can set up two Trusts, one in each name, and the property can be held 50/50 in each Trust.
If you would like to create a Trust and your spouse doesn’t, you can still transfer 50% of the property into your Trust and the remaining 50% can be held in your spouses’ sole name. When your spouse passes away, Confirmation or Probate will be required for their share of the property. When you pass away, this will not be required for your share.
The same can be done with investments in joint names. The policy can be segmented into different parts so you can transfer some into your Trust.
What happens with the Family Protection Trust when I pass away?
The Family Protection Trust can still continue after you pass away as the Trustees are the legal owners of the assets held in Trust and they will have the authority to deal with them.
If you are appointing yourself as a Trustee, it is recommended that you always appoint at least one other Trustee who can deal with the assets when you pass away.
We have an Estate Planning department here at Jones Whyte that can assist in helping you decide if a Family Protection Trust is the best choice for you. Make an appointment today with our new business team who will arrange an appointment for you to speak to one of our specialists. If a Family Protection Trust isn’t the best option for your circumstances, our specialists will discuss other options we have that may be more suited for your needs.
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