How do I go about terminating a life interest trust?
Some trusts will terminate automatically, such as if someones dies or a beneficiary remarries. Also, often the trustees are given the power to change the life tenant’s income from the trust or even to set up new trusts and sell assets. Otherwise, the arrangement is a legal document, so you need solicitors to help terminate it. You should get legal advice before this as there could be unexpected tax consequences.
What other types of trusts can you use?
You are not limited to setting up a life interest trust, there a range of different trusts that you can use, and they are all worth exploring so that you can identify which one is likely to be the best one for your circumstances. These include:
Asset Protection Trusts
An asset protection trust is a tool for managing your estate to make sure your assets go where you want them to after you die. It is a that trust is set up during your lifetime and put house in trust, and assets in the trust are distributed quickly to the beneficiaries once you pass away. You retain a life interest in property .
Family Protection Trusts
A family protection trust gives you a legal option where you have full access to the assets in the trust while you are alive, but you get to choose who will inherit from the trust fund.
Inheritance Tax Planning Trusts
Inheritance tax planning trusts can set up a trust to help you manage what will happen to your property after your death.
Not only can a trust help reduce the inheritance tax you and your beneficiaries will pay, but they are also a useful tool for asset preservation and to give you flexibility in how you manage your finances. However, it is worth getting advice on setting up a trust.
Home Protection Trusts
A home protection trust protects your rights to reside in your family home. Having a trust makes sure that the property passes on to your beneficiaries after your death.
You could also consider giving your property as a gift to a person during your lifetime, instead of setting up a trust. This can have tax benefits if it is done enough years before your death, as it may mean your estate comes below the nil rate band. However they must be someone you trust, as one you given them the property, they can do whatever they please, including if they want to sell the property you wanted the life tenant to live in.