The Wealth Preservation Trust (WPT) is used to 'ring fence' assets providing peace of mind that the assets are protected to provide for chosen beneficiaries.
You will be able to have full use of them during your lifetime and will be free to move, downsize and spend the savings you have protected. You will be able to receive income from your savings.
The Wealth Preservation Trust is a lifetime settlement used to provide for a surviving spouse and future generations and to attempt to protect hard earned assets against the possible claims of third parties. The trust splits the beneficial enjoyment of trust assets from their legal ownership. The beneficiaries of a trust are the beneficial owners of equitable interests in the trust assets, but the legal title to the assets is held by the trustees.
Avoidance of Probate When a person dies, and they own substantial assets, including a share of property, their estate usually requires a grant of probate in order for the personal representatives (executors or administrators) to gather in assets and dispose of assets according to the Will or intestacy. This usually results in additional costs, time delays and inconvenience.
It can be argued therefore that eliminating the costs and problems of probate is a valid reason for placing assets into trust during the lifetime of the clients, particularly where estates are not so great that funding a grant of probate would be a significant cost
Avoidance of Court of Protection If you were to lose capacity, it’s the Attorneys or Deputies who have to arrange for the disposal of the property and/ or capital. If assets are placed in a lifetime trust they come under the control of trustees, who can then dispose of or manage the assets as they wish.
Avoidance of Inheritance Tax for future generations While still part of your estate for Inheritance Tax purposes, future generations can however benefit by tax savings of up to 40%, for up to 125 years.
Protection from Estate Claims If you wish to exclude someone from benefiting from your estate when you die, then that person might be able to make a claim on their estate using the Inheritance (Provision for Family & Dependants) Act 1975.
Assets placed into a lifetime trust, however, are out of reach of the above Act. Only the death estate can be subject to any redistribution if the claimant was successful, so assets placed in trust in life are not assessable by the Court in such a judgement.
Protection from Business Failure If you wish to protect your personal assets from future business failure, the Wealth Preservation Trust can ring-fence these.
Protection from Relationship Failure/Remarriage after Death People often have an expectation that when they die the assets they leave to their surviving spouse/partner will eventually pass to their children when the survivor eventually dies. However, there is the ever present risk that when the survivor inherits they might eventually remarry and either leave their entire assets to a new spouse via a new Will or their current Will becomes void due to marriage and the survivor dies intestate (thus the new spouse benefits according to the rules of intestacy).
Protection of a Disabled Beneficiary If assets are held in a lifetime trust where there is a disabled beneficiary, they may control the distribution of assets for the benefit of this person in such a way that their benefits are not compromised
Protection from Care Fees Clients often ask the Wealth Presevation Trust can protect against care home fees. The fear is that the family home will be taken from them and sold, so that nothing is left for future generations. This is a complicated topic and involves the concept of 'deliberate deprivation'. Any act carried out whereby assets are transferred, sold or used up deliberately to diminish the settlor's assets to avoid paying care fees can be considered as deliberate deprivation. If assets are transferred into a Wealth Preservation Trust whilst care fees are not even contemplated and when you are healthy and not considering going into care, the assets may be excluded from a local authority assessment for care fees. A full assessment of the settlors' circumstances will be required to provide full and accurate advice in this respect.
It is not just the family home which can be put into trust. Other assets such as building society accounts, bank accounts, stocks and shares can be placed into the trust for the use of the settlor and surviving spouse during their lifetimes and for other beneficiaries after the death of one survivor. Income and capital can be paid to the survivor for his or her welfare at the discretion of the trustees.
The trust is IHT and income tax neutral and does not interfere with the Capital Gains Tax principal residence exemption.
To find out more about the Wealth Preservation Trust and whether or not it meets your family needs contact Paul Humphreys on 01691 652233.
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