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The use of trusts is becoming more familiar in estate planning but - are all trusts equal?

One of the more common trusts is a Flexible Life Interest Trust which we don't actually offer.

When clients tell me that they already have a trust, or they can get the same thing cheaper elsewhere, a little bit of digging usually informs me that this just isn't the case. What they have, or are being offered, is not the same type of trust at all and does not give anywhere near the level of protection that we are able to offer clients through our Discretionary Trusts.

Often the trusts they've been offered are Flexible Life Interest Trusts, so when would they be the best solution?

When you know that the client:

  •   Will not enter care
  •   Will always be able to claim the TNRB - Transferable Nil Rate Band for Inheritance Tax (IHT) purposes
  •   Will always be able to claim the RNRB - Residential NRB
  •   Their children/grandchildren will not divorce
  •   Children will not be receiving means tested benefits when the client dies
  •   Their children/grandchildren will not have an IHT liability of their own

i.e nothing will ever go wrong for them!!  They obviously have a crystal ball.

We encourage clients to stop trying to predict the future.  The correct estate planning is all about moving the decision making process from instruction taking, when nobody knows what the client’s family circumstances will be, to the point where the correct the decisions can be made, post-death.