A fundamental benefit of using Trusts is the ability to provide that gifts pass to consecutive beneficiaries ‘in turn’, ie making provision in a Will Trust for one particular beneficiary such as a spouse, then on the spouse’s death to make provision for those assets to pass down to a second set of beneficiaries such as children.
The other fundamental benefit is that Trusts protect the value of gifts for the beneficiaries in turn, ensuring that beneficiaries have full access to the assets but these assets are protected from outside third parties who cannot claim a share.
Trusts are excellent structures to protect assets until beneficiaries have reached a certain age or can protect assets for vulnerable beneficiaries or those with disabilities. They are the common form of structure to protect a disabled beneficiary’s entitlement to state benefits.
The standard Trust used is a Discretionary Trust. The Trust comprises a series of legal documents. The essence of the Trust is to create a ‘lifetime loan’ of assets to beneficiaries in turn, such as a spouse for life, then children for their lives and so on for the lifespan of the trust (125 years).