Will Trusts

Will trusts serve as a useful method of mitigating the effects of inheritance tax (IHT) on your estate, and also as a means of providing for your loved ones after your death.  You may want to split up your inheritance along the lines of £312,000 to beneficiaries other than your spouse or civil partner in order to take advantage of the inheritance tax nil-rate band, rather than transferring the entire estate to your spouse (who is exempt from IHT) as it will result in a greater taxable value of estate once your spouse or partner passes away in turn.  However, this can result in a significant portion of your estate not being available to your spouse or civil partner, who may need the funds and income – in particular when it comes to property.  Will trusts can help solve this problem:

  • When you pass away, the £312,000 nil-rate band is used to create a will trust of £312,000 in value, with the rest of the inheritance administrated as you have directed in your will.
  • Income from the will trust is paid to your spouse or civil partner (or children, or other beneficiary you direct when creating the trust), providing them with an income.  They may also be able to access the capital of the fund.
  • When your spouse or civil partner passes away, their estate benefits from the nil-rate band when calculating IHT.  Additionally, your children benefit from the will trust, which is also IHT exempt as a result of your own nil-rate band.
  • Will trusts can also be useful for property, with your share of the property value as a trust with an agreement to allow your spouse or civil partner to continue to live in the home as a beneficiary.

For will trusts and other inheritance tax matters, take advantage of the offer of a free, no obligations first consultation with qualified UK financial consultants through our quick and easy online enquiry form.

Disclaimer: Every effort is made to keep the site accurate, however please bear in mind that tax rates are subject to change. If you require tax advice you should speak to a professional tax adviser.