What is a Will Trust – Do you have one? Do you need one?
Do You Have Young Children? Adult Children? Children from a Previous Relationship? Are you Concerned About Your Family's Future?
Have you ever wondered what would happen if you were no longer around to care for your loved ones? It's a tough question, but an essential one, especially if you have young children relying on you or you have children from a previous relationship, although you still want to provide for your current partner.
You might have wondered, who would manage your assets for the benefit of your young children if you were to pass away unexpectedly or you and your partner were to pass away unexpectedly?
Have you ever thought about what would happen if one of your adult children passed away before you?
Have you ever thought about your grandchildren and ensuring they are provided for?
Perhaps you have a blended family, where ensuring your partner's well-being is important, but you also want to ensure the bulk of your assets ultimately benefit your respective children.
These are all valid concerns and scenarios where a Will Trust can be an invaluable tool.
Let's delve deeper into what exactly a Will Trust entails, why they can be incredibly beneficial for families in various circumstances, and how the correct drafting in your will can potentially save you thousands of dollars down the road.
Understanding Will Trusts:
Will trusts, also known as testamentary trusts, are established through a person's will. They come into effect upon the individual's death and can serve various purposes, from providing for underage children until they reach a specified age to providing for your partner while ensuring your children are still taken care of
Providing for Young Children:
Are you a parent with young children? In your will, you've stipulated that your children won't receive their inheritance until they reach a certain age, ensuring they are financially supported in the long term. However, without proper drafting and advice, the administration of this trust could incur significant costs, potentially diminishing the assets meant for your children. You also want to ensure the right person is appointed to manage your assets for your children, to ensure they are well cared for during their upbringing and also sufficient assets when they reach the specified age. Working with a professional ensures the trust serves its purpose effectively, the right people are appointed, all situations are thought of and accounted for providing peace of mind for you and financial security for your children. If you don’t form this in your will, the Court will have to set this up, costing tens of thousands in establishment and management fees and your children will automatically receive at the age of 20 which might not be appropriate, there may also be minimal funds left due to the court establishment costs and ongoing management costs. It is far more cost effective to set this up in your will in consultation with a professional potentially saving you thousands,
Gift Over to Grandchildren:
Do you have adult children and grandchildren? Have you ever thought about what would happen if your child passed away before or with you… While we understand these are not nice things to think about, if you can just turn your mind to it once, you can save your loved ones thousands of dollars and additional stress during a time of grief. Within your will, we call this a gift over, which essentially involves leaving assets to a child with a provision that, if they pass away, their share goes to their children, your grandchildren. This setup may result in the formation of a will trust to manage the inheritance until your grandchildren come of age. Failing to set up this trust correctly could lead to substantial expenses in the future. Therefore, consulting a professional to draft, can ensure your wishes are recorded and save your family thousands.
Life Interest for Property Ownership:
Do you have a blended family? Are you in a relationship where you and your partner want to ensure you are both provided for during your lifetime, however when you have passed that your respective children from a previous relationship receive your assets? Firstly, understanding how your property is owned is crucial, we have seen far too many situations where people believed they owned property in a certain way when in fact they didn’t, resulting in costly claims and unnecessary stress on your loved ones. Setting up a life interest in property or asset ownership is crucial to ensure each party's intentions are honoured. Poorly drafted life interests could lead to unintended consequences, such as the invalidation of the will trust or disputes among beneficiaries. Working with a professional ensures the life interest aligns with your wishes, can be managed correctly, while also protecting your children's inheritance.
Conclusion:
Will trusts are invaluable tools in estate planning, providing a means to protect and provide for your loved ones beyond your lifetime. However, the complexities involved necessitate professional guidance to drafting effectively. By seeking expert advice and drafting will trusts carefully, you can ensure your assets are managed, costs are minimised, and your family are provided for.
