Trusts are sometimes used to distribute assets when someone dies rather than making specific provisions in a will. This allows the trustees to decide how and who to pass money to and can result in less tax being paid.
The Sunday Telegraph reported the case of a family dispute where the trust was set up by a father to benefit his wife and children. His son, a beneficiary who was also a trustee, ended up in dispute with his 79-year-old mother and blocked distribution of money due to her. A costly legal case resulted before she won her share of the money. Lawyers suggested such trusts should have at least one ‘professional’ independent trustee to avoid this type of problem.
Trusts can be useful devices to distribute assets but good legal advice is important when setting them up.