August 1995 seems a long time ago but that was when I first started working at Edmund Carr shortly after finishing my A levels. It’s scary to think that was almost 20 years ago! Although I left to work for another firm of accountants for a couple of years, the majority of my working life has been with Edmund Carr.
A lot has changed over this time, not only in terms of our firm, technological advancements and the way we work but also from a personal point of view. I became a partner of the firm in 2005, which was a big step in my career; in the same year I also got married, and in 2009 my daughter Sophie arrived. All these changes have brought new and interesting challenges for me in their own way.
Much of my spare time is now spent with my family and as I write this article I am on the drive back from our family vacation in France. We had a very enjoyable week together in the sun and even managed to get some relaxation in, well as much as you can expect with a four year old in tow!
Thinking of family and how important this is to me leads me to the main focus of my article for this month which is the use of trusts in estate planning. Many people think that trusts are very complex and often find it difficult to understand how they work. However, in the right situation they can be very beneficial.
The general purpose of a trust is to allow someone (the Settlor) to gift an asset without completely losing control of that asset. This is achieved by appointing a third party (the Trustees) to look after any such assets on behalf of either the Settlor or any other persons named by the Settlor (the Beneficiaries).
The benefit of using trusts for estate planning is that the value of the individual’s estate and any potential inheritance tax liability can be reduced by making a gift of an asset, but at the same time, control can be kept in terms of who and when someone can benefit from that asset. This is something which many people find advantageous to making an outright gift, particularly if the potential beneficiaries are still very young or are not used to handling sums of money. Trusts can also be used to protect assets in the situation of a marriage breakdown as an ex-spouse would not be automatically entitled to the assets left in trust for someone else.
Protecting your assets is something that most would consider an important part of estate planning so the use of trusts is worth considering particularly if you can include some inheritance tax mitigation at the same time.
There are of course other factors to consider when looking at estate planning and if this is an area you would like to discuss further please speak to your contact partner at Edmund Carr.