Protect Your Wealth: 3 Advantages of Creating a Trust Fund

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Trust funds have been in use for decades to safeguard family wealth. They exist for a reason. If you have worked hard for your money and are worried about how it will be distributed after your demise, then think about creating a trust fund for your loved ones. There are many advantages to doing so:

1. It can safeguard the interest of people with special needs

Many people in the UK have disabilities and special needs. Research shows that 7.9 million people of working age have a disability, and 3.4 million of them are economically inactive. That is not surprising.

People with disabilities are, in some ways, already at a disadvantage. Some may not be able to perform any tasks at all. Others may be able to do so but at a slower pace compared to their abled counterparts. As a result, they may have difficulties getting jobs and keeping them, which puts them at a financial disadvantage.

If you have a loved one with special needs of some kind, you may be worried about what would happen to them after you are gone. They may not be in a position to manage the wealth you leave to them. There is also a chance they may be taken advantage of by others. That is why a trust fund is helpful.

A trust fund enables you to safeguard assets on behalf of loved ones with special needs to keep others from interfering with it. That ensures that the beneficiaries will be taken care of for the rest of their lives, long after you are gone.

2. It can cut down inheritance tax for loved ones

When you die and your loved ones inherit the property and investments that you have left behind, they will have to pay inheritance taxes. The standard inheritance tax above the threshold is 40%. That can add up to a significant amount of money that your loved ones will miss out on.

But if you were to transfer your assets to a trust while you are still alive, then technically those assets are no longer yours. If you were to die, the wealth safeguarded within the trust would be passed on to your beneficiaries while incurring minimal inheritance tax charges. It assures they get most of your wealth instead of it going to the government.

You, however, need to be careful to fulfil all the required legal conditions to ensure the trust you create is not considered yours. You should hire financial planners in places like Surrey to help you out. Any mistake you make can cost your loved ones a significant part of their inheritance.

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3. It prevents irresponsible beneficiaries from squandering family wealth

Some people remain irresponsible, no matter how well they were brought up. Life doesn’t always work the way people want to. If you have family members you would like to leave your wealth to but are afraid they will waste your wealth, a trust fund will be helpful.

You can provide them with a lifetime income generated by the investments included within the trust. But you can do so while stipulating that the original investments should not be touched. This may help safeguard that wealth for many generations. Even when the irresponsible beneficiary incurs debts that lead to bankruptcy, the wealth will remain untouched.

You can also set conditions under which your beneficiaries can access the wealth in the trust. This could be when they achieve a particular age by which time they may have matured. Or it could be when they have fulfilled other conditions you set out during the trust creation process.

You need to consider all possibilities and possible complications when creating a trust fund. But with the help of a financial planner, you can create a trust that safeguards your wealth for generations to come. Your beneficiaries will enjoy the fruits of your labour long after you are gone. So will their descendants.

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