Many people are advised to set up a prenuptial agreement to secure possessions in the event of a marriage breaking down. Although a Court may take one into account, a prenuptial agreement is not automatically legally binding. Also, they still carry a stigma resulting in couples, and their families, feeling awkward discussing them. The same can’t be said of discretionary trusts which have been used as asset protection & tax planning tools for centuries.
Often there is pressure from parents who are helping financially, perhaps a deposit for a house. In many cases they are concerned about their wealth being passed down to their children and then losing half of everything to their ex-daughter/son-in-law if their child subsequently divorces.
Perhaps a discretionary trust created in your lifetime offers a better solution to protect your family’s assets. They are also a very useful tool to protect family wealth against a potential divorce when children marry & they don’t have the same stigma.
A discretionary trust gives you, and your spouse, full control of all assets by appointing yourselves as the trustees. You decide who benefits from the trust. This could be your children or grandchildren. You could even appoint your spouse in the future if your family situation changes.
Trusts allow you to get your assets out of your estate gradually to avoid inheritance tax.
If you have not made any previous gifts you may each put up to £325,000 into a trust. After 7 years, this will be outside of your estate for inheritance tax purposes.
To ensure that that you have the most appropriate and up to date planning in place call Barnet Wills for a free review now on 020 3189 1737 or email us at firstname.lastname@example.org