Unleashing Potential: Abilities Beyond Boundaries

  🧾 Trusts for Parents: Should You Set Up a Lifetime Trust or a Will Trust? 👨‍👩‍👧‍👦 Why This Matters As parents, especially those of children with additional needs, we often carry the silent worry: "What will happen to my children if something happens to me?" Setting up a trust can be a powerful tool to secure their financial future, protect assets, and reduce tax. But there’s a big choice to make: ❓ Should you create a Lifetime Trust now , or include a Trust in your Will (Testamentary Trust)? Let’s break it down — especially if you're thinking about both a special needs child and a typical child , and possibly passing on your home . 1. ✅ Lifetime Trust – Great for a Vulnerable Person’s Trust (VPT) If you have a disabled or vulnerable child , a Vulnerable Person’s Trust (VPT) is one of the most generous and tax-efficient options available – but only if it qualifies under Section 89 of the Inheritance Tax Act 1984 . 🔍 Key features of a Lifetime VPT...

  1. What is a Lifetime Trust? A lifetime trust is a legal arrangement where assets are transferred by the settlor into a trust during their lifetime , to be managed by trustees for the benefit of beneficiaries. Unlike a Will trust , which comes into effect only on death, a lifetime trust is active immediately . 2. What Are the Main Types of Lifetime Trusts? Vulnerable Person’s Trust (VPT): For disabled or vulnerable beneficiaries (as defined by HMRC). Bare Trust: The beneficiary has an absolute right to both income and capital ( i.e., the beneficiary can demand the trust assets at any time once of legal age, and the trustees have no discretion ). Discretionary Trust: Trustees have full discretion over how and when beneficiaries receive income or capital. 3. What Are the Tax Benefits of a VPT? No 20% entry charge , even if value exceeds the £325,000 nil-rate band (if Section 89 conditions are met). No 10-year or exit charges (unlike discretionary trusts). ...