Even though you may have written a will to take care of your family after you pass on, they may not be able to get what you’ve left them for several months. A will must go through the probate process before beneficiaries receive any of the funds that they’ve been left. Fortunately, there is a way to avoid probate with a probate trust.
What Is a Probate Trust?
A probate trust allows you to place the assets such as money and property that you wish to leave your family into it so that legally, they are no longer yours. Then, when you die, the trust can be passed on to your beneficiaries with as little delay as possible. However, a probate trust does not exempt the money, property, and other items from inheritance taxes.
Types of Probate Trusts
There are two types of trusts in Norwich that can be used as probate trusts. They include bare and discretionary trusts.
A bare trust has the trustee hold on to assets meant for the beneficiaries of the deceased. Usually, this type of trust is written for the deceased’s children who are too young to legally take possession of the assets. For instance, you can leave your children a house, but if they are young when you die, then the trustee will maintain possession of the asset until your children are legally old enough to make decisions about the property.
Usually, the settlor, who is the creator of the trust, will dictate how the assets of his or her estate are to be distributed to their beneficiaries. However, in a discretionary trust, the trustee(s) have the discretion as to how they treat both the capital assets and any income that they generate. The settlor can sign a Letter of Wishes, which is non-binding instructions as how he or she wants his or her estate to be settled.
Setting up Trusts
To have a trust set up, you must retain a solicitor who is experienced in handling trusts. The way a trust is written is important as the legal wording needs to be precise. While setting up trusts can be expensive, there are ways to cut the costs by having information prepared for the solicitor.
Some of the preparations you can make include:
- Create a list of items, with their values, that you want to include in the trust.
- Select an individual or management company that you trust to act as the Trustee(s).
- Name your beneficiaries and the assets, or percentage of assets if they are shared, that they should receive.
- Outline the terms of the trust, which is done in a document called the Trust Deed.
An experienced solicitor can provide advice when setting up a trust if you’re unsure what to do; however, by making these preparations, you can usually cut the costs of setting up a trust.
You needn’t be wealthy to set up a trust as it is advisable for people who are leaving their loved ones money. A probate trust is a way to ensure that they get access to the money quickly.