How does an Asset Protection Trust help me?

Trusts carry out a number of different functions. One of the main benefits is ensuring the control of assets remain in the family bloodline, which we call bloodline protection.

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Trusts carry out a number of different functions. One of the main benefits is ensuring the control of assets remain in the family bloodline, which we call bloodline protection.

There are a number of issues that could mean assets are passed outside of the family when that was never the original intention of passing assets to children and grandchildren.

Divorce

Bankruptcy

Remarriage after the death of a bloodline relative

These and other issues are covered in our video – Is Estate planning more important than inheritance tax planning.

Assets can be gifted into Trusts during lifetime or on death. An asset protection trust can protect the gift and retain it within the family bloodline.

An asset protection trust is useful for bloodline protection, but only if those assets are intended to be given away directly.

This could be a property, although capital gains tax will apply if the property in question is not the main residence. There are other significant taxation issues which arise on the rented property being held in an Asset Protection Trust, which means experienced advice is essential.

The assets could also be cash intended to help children onto the property ladder or other reasons. In this event, a deed of assignment places the funds into the Trust, and a Deed of Loan lends the money interest-free to the relevant beneficiary. In the event of a potential claim on those assets by a non-bloodline person, the loan is recalled into the Trust and can be re loaned back again later. For example, after a divorce is settled.

This works because there are multiple beneficiaries of the Trust ( my children and grandchildren) some who may not be born yet and so a divorce court cannot stipulate the asset belongs to the beneficiary to who it has been loaned.

If you are considering making significant gifts with a value in excess of £50,000 this planning would be useful so please call us for a free no obligation consultation.

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