One of the biggest myths in the money world is that trusts are just for the very wealthy or to help with complex financial needs.
This is not the case, trusts are of use to practically anyone.
Most people will have a life assurance policy or a pension.
Both can pay out large sums to loved ones on death.
These sums could be paid direct to next of kin. For example, a spouse or children.
However, they could alternatively be paid to a trust, which is set up for the benefit of the family members who become the beneficiaries of the trust.
The advantage of using a trust solution is that it can help place a long-term wrapper around the sums paid out and this could protect against common threats which can reduce family wealth, later down the line.
For example – a partner or spouse remarrying can leave the wealth exposed to a claim in the event the second marriage does not work out, from the new partner/spouse.
A trust can also potentially help with Inheritance Tax savings and next generation tax planning.
The importance of a trust is that it provides extra protection for beneficiaries and this is reflected by the use of trusts being considered best practice for anyone advising on a life policy or pension death benefits.
Yet very few people have organised a trust, maybe because of that common myth mentioned at the beginning.
If you have a pension or a life assurance policy it is well worth exploring how a trust can be used to help protect your loved ones in the future.