Lifetime Trusts

What a Lifetime Trust does

Its purpose is practical. Because the legal title to whatever the trust holds sits with your trustees rather than with you personally, those assets do not have to wait for a grant of probate before they can be sold, transferred or managed. Probate commonly takes many months, and on a difficult estate well over a year. A Lifetime Trust removes that wait for the assets it holds.

Depending on which of the four types you use, it can also keep your Residence Nil Rate Band intact, and let you and your partner each name different ultimate beneficiaries so that your own children are certain to inherit your share.

What it does not do

We would rather tell you this at the outset than have you find it out later. A Lifetime Trust is not a route to:

• reduce inheritance tax. You keep access to and control of what is held in the trust, so the value stays inside your estate and is taxed there exactly as before;
• avoid means-tested local authority care charges where care is reasonably foreseeable;
• shield assets from creditors where insolvency is in prospect;
• defeat a claim against your estate under the Inheritance (Provision for Family and Dependants) Act 1975. Because you keep the benefit of what the trust holds, its value remains part of your estate and available to such a claim. The exceptions are the discretionary funds: the whole of a Family Asset Protection Trust, and the capped nil rate band fund inside an Estate Allocation Trust or an Investors Estate Allocation Trust. Those are genuinely settled, so a claimant would have to reach them through the Act’s anti-avoidance provision instead. That is a technical difference, not a reason to set up a trust.

If a trust is marketed to you as a single solution to all of the above, our view is that it is probably mis-sold.

The four types we offer

• Family Asset Protection Trust (FAPT) — a single discretionary fund, for estates where protection is the point and Inheritance Tax is not expected to be a concern. Nothing is set aside for any one person, so your trustees can look after a beneficiary who is vulnerable, receiving means-tested benefits, going through a divorce or too young to inherit, rather than handing them a sum outright. There is no capital gains tax on a family home for as long as it qualifies for main residence relief, and it can be upgraded to an Estate Allocation Trust later. Read more about the Family Asset Protection Trust.
• Estate Allocation Trust (EAT) — for the family home. Your Residence Nil Rate Band is preserved, there is no entry, ten-yearly or exit charge, and no capital gains tax for as long as the home qualifies for main residence relief. A couple each have their own separate fund, so you can name different ultimate beneficiaries. Read more about the Estate Allocation Trust.
• Investors Living Trust (ILT) — a bare trust for a home or investment property, and one trust can hold several properties at once. It is transparent for tax, so it changes nothing at all about your income tax, capital gains tax or inheritance tax position. Read more about the Investors Living Trust.
• Investors Estate Allocation Trust (IEAT) — the two above combined, where there is investment property as well as a home. Your income arrangements are untouched: rent continues to be received and taxed exactly as it is now. Read more about the Investors Estate Allocation Trust.

Which one applies to you

• Family home, and Inheritance Tax is not expected to be a problem — a Family Asset Protection Trust. The whole fund is discretionary, which gives your trustees the widest room to look after whoever needs it.
• Family home, and Inheritance Tax is a factor — an Estate Allocation Trust. It preserves your Residence Nil Rate Band and carries no entry, ten-yearly or exit charge.
• Family home, Inheritance Tax is a factor, and tax planning is happening now or within the next seven years — an Investors Living Trust, or an Investors Estate Allocation Trust where there is investment property as well. A bare trust changes nothing about your tax position, so it does not use up nil rate band that the other planning may need.

Your free review settles which of these applies before anything is decided.

Lifetime Trust Service Levels

We offer clear, fixed-fee Lifetime Trust services with varying levels of support, depending on the complexity of your arrangements and the guidance and reassurance you require.

Standard Service

Our Standard service is suitable for many lifetime trust arrangements and provides comprehensive support. It includes in-person guidance, multiple draft revisions, supervised signing and professional checks to ensure your trust is correctly established.

Premium Service

For more complex trusts, or for clients who want priority handling and enhanced ongoing support, our Premium service offers a higher level of care. This includes senior adviser involvement, priority progression, additional draft revisions, and ongoing support features to provide greater reassurance.

Please note that a Basic service is not available for Lifetime Trusts, due to the additional complexity involved.

You can read more about what is included at each service level on our Service Levels page. Full pricing information is available in our Price List here.

Prices

The four lifetime trusts are priced at Standard and Premium only. For one person: a Family Asset Protection Trust or Investors Living Trust is £3,495 or £4,695; an Estate Allocation Trust £4,495 or £5,995; an Investors Estate Allocation Trust £6,495 or £7,995.

For a couple: £4,495 or £5,995; £5,495 or £7,295; and £7,495 or £9,295 respectively. Every price is a total and includes the £1,000 legal drafting disbursement. See the full price list.

Your free review tells you what you need before you commit to anything. It costs nothing and commits you to nothing.