Estate planning is an important part of deciding how your assets are allocated after your death. Two of the main options for this are living trusts and wills. It is worth considering the benefits and disadvantages of both to decide which you need.
Wills
A will distributes assets after death, and can also arrange the future care of minor children. It is fairly simple and inexpensive to draw up and is only activated after death, meaning that up to then, it can be changed.
After death, the executor must apply for probate before the assets can be distributed, which takes time. It also does nothing to minimise inheritance tax. A will is a matter of public record, so information cannot be kept private.
It also makes no provision for management of assets during your lifetime. Therefore, you should also set up a UK power of attorney to appoint someone to manage your finances if you are incapacitated. This can be done by a solicitor or online using a specialist website like powerofattorneyonline.co.uk/.
Living trusts
With a living trust, assets are placed in a trust during the owner’s lifetime. They are managed by a trustee, with the assets distributed at an appointed time.
Trust structures vary and can be complex, with little flexibility to make changes, but they also become a separate entity, so there may be tax savings, such as reduced or no inheritance tax. They are usually more expensive to set up, but after death, there is no need for probate, and the information can be kept private.
