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Building and protecting your wealth

Trusts Are the Key to Protection Planning

Trusts can be extremely useful for wealth management, and are effective tax planning tools. Essentially, they’re a legal form that holds money or other assets for someone else. They enable you to give away assets while retaining a degree of control of them and the different types of trust allow for a considerable degree of flexibility.


This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice. 



Why might you use trusts?

When looking at your own financial plan, it is important to look at your personal scenario to work out what options will best help you achieve your goals.

There are a number of reasons why you might choose to use trusts as part of your financial plan – to hold assets until your child turns 18 or provide for your spouse so that the estate can go to your children are just two.


Trusts can protect assets from tax and outside claims

One big advantage in these situations is reducing your Inheritance Tax (IHT) liability. Using trusts can sometimes reduce or even eliminate the liability for an asset; it can also help to keep the value of the estate within the nil-rate band.  In addition, trust can also help to protect your assets from the costs of long-term care.

When assets are left to beneficiaries as a direct lump sum payment, these assets are considered to be part of the beneficiary’s estate, vulnerable to attack from future divorce settlements, creditors, and taxation.

Trusts are a way to get the full sum of the inherited asset without having to worry about any taxes. This comes into play when your financial plan also involves a life cover policy. To get the full pay out from your claim, put the plan in a trust so that the pay out won’t be subject to IHT.


Trusts are also the best way to get the right amount to the right people.

A trust deed will clarify who should benefit from the policy holder’s life cover pay out. Without one, the beneficiaries in your will end up getting the pay out. If you don’t have a will, then the State gets to decide who gets the money. So, if you have specific plans for your money, make sure you set up a trust.


Trusts ensure that the pay out your family is entitled to is paid out as quickly as possible.

It can sometimes take weeks or even months (or years if the will is contested) to prove the validity of a will and until that’s done, the insurance company legally can’t disburse the payment to anyone. Getting money your family might sorely need into their hands as quickly as possible after your death should be your priority, and trusts allow you to do that.



Setting up a trust

There are a wide variety of trusts available to you — from discretionary and absolute trusts to life interest and statutory trusts. All offer different purposes so you might end up using more than one type. It’s best to consult a financial adviser to ensure you’re using the right trusts for your assets.


Let us help you protect your assets

With the strategic use of trusts as part of your financial plan, the Dental & Medical Financial Services team can help you ensure your chosen family and friends will benefit from the inheritance you want them to receive.

A good starting point is to connect with your trusted independent financial adviser. Don’t hesitate to reach out today.


Want to protect your assets for your family?
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

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