Do you wish certain beneficiaries to be protected from their own immaturity?
You as the settlor choose a class of potential beneficiaries and give your trustees the power to determine how much, if anything, each beneficiary should receive and when. The settlor does not determine in advance, the precise extent of each beneficiary's entitlement.
Do you wish certain beneficiaries to be protected?
You can potentially protect against a beneficiary's future divorce, financial immaturity amongst a number of other family circumstances.
You may also set up a discretionary trust (within the prevailing nil rate band)under your Will for inheritance tax planning purposes. This can create a potential saving in inheritance tax.
Discretionary trusts can also be used for the purposes of catering for a disabled beneficiary who would not be entitled "as of right" to the trust fund but would be amongst a class of potential beneficiaries.
Elderly individuals who wish to protect their assets from potential future events may also find a discretionary trust to be useful as would a testator who wishes to cater for his elderly parents under his Will.
NB: Any discretionary trusts in excess of the nil rate band executed during the lifetime of the settlor are subject to a one-off IHT charge of 20% but where the contribution is below the current nil rate band, no lifetime IHT charge is due and providing the settlor survives 7 years from the date of the gift, this nil rate band can be applied again to the same trust or elsewhere.
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