When to use a trust for estate planning

[CrapFlowers]

Lots of threads about wills on MN at the moment have got me thinking.

I have set up my will so SSIEM of my estate goes to DH, some to DC. It’s a mixture of property, shares, cash and life insurance. Very straight forward.

At what point does it become worth looking at utilising a trust or some other sort of mechanism - there seem to be an awful lot of people on MN using trusts - however neither the solicitor that drafted my will nor my finically adviser has ever suggested doing anything other than I currently am.

Your financial advisor should definitely have mentioned this to you if it's appropriate. That's what you pay them for after all. It's really them you need to speak to.

The simple answer is when your family is a mess! Either the structure or the individuals.
Trusts are fab if you want to protect individuals or assets. So if you remarried and wanted your new toy boy to live in your house until he died when you wanted it to go to your kids.
Or if one of your children went totally bonkers and couldn’t look after themselves. You wouldn’t want to disinherit but might want someone to manage the money etc for them so that it lasts and or they don’t blow the lot on a yacht.
The other issue is age. My DS is 3. If DH and I get hit by a bus everything we own goes into a trust for his benefit so his guardians have an income to look after him until he’s 21 when he gets control.

I've noticed similar and been a bit puzzled- I think some people on MN misuse the term 'trust' when they really mean 'life interest' (a simpler and more common legal mechanism), and also there are (if you believe what people say!) a disproportionate number of millionaires on MN, and probably also a larger than average number of people with dysfunctional families both of which might make trusts more necessary...

I'm no expert but like PP said, if a trust was appropriate or necessary in your circumstances I would have expected your financial or legal advisor to tell you so. For your average non-millionaire person whose main assets are in property, cash savings, pension etc then trusts are mainly used to administrate/caretake money left to people who aren't able to do so themselves, either minor children or adults lacking capability to manage their own money - if you want to straightforwardly leave your money to your spouse or capable adult children, all having a trust structure will do is create more administration and difficulty... I guess if you are getting into the realms of trying to avoid inheritance tax or care home fees then you can legally divest yourself of some of your assets ahead of time but again you don't necessarily have to create a trust to do so, you can just gift money or property to someone else if you want?

@StephenBelafonte like most people I think I use my advisor to look at discrete issues for me rather than organise my entire financial life so I was hoping to get an idea of thresholds.

My DC are not adult yet and I’d like them to inherit in part directly.

I haven't read all the posts you're referring to, but is it possible that many people are simply referring to writing their life insurance in trust? While not suitable for everyone, it would probably be advisable for most people, to ensure the life insurance payment is excluded from the value of your estate and therefore avoid inheritance tax, on what could be a fairly sizeable payout. It also means you bypass probate, so your children would have access to the money quicker.

This is certainly something we have done as it makes complete sense for us. Most people have life insurance, so I just thought perhaps this is what you're thinking of?

I’ve only known of it once - a colleague’s children were left very substantial amounts by an estranged grandparent, held in trust until they were mid 20s. I remember that it took ages to wind it up, and whoever was administering it - presumably solicitors - charged a bomb for the admin and seemed to drag it out for way longer than necessary, charging £££ for every letter and email, etc.

Evidently very good business for the solicitors!