The benefits of Pilot Trusts in Estate Planning

Pilot Trusts are a method of providing estate planning into the future and beyond the death of the client. Create trusts now and they will operate after your death to provide protection against remarriage, bankruptcy, divorce, vulnerable beneficiaries and tax mitigation. Furthermore they will remove property from assessment for Long Term Care Fees. They can be opened using minimal capital, with a view to receive more assets upon death.

These trusts are suitable for single individuals and couples – both married and unmarried. As they are capable of using property that is presently mortgaged, Pilot Trusts are probably the most flexible of all estate planning tools.

The key features of pilot trusts:

• Lifetime discretionary trusts set up in conjunction with a Will

• No restriction on the amount of trusts you can set up

• It takes only minimal capital for set up (usually £10 per trust)

• Minimal administration until assets are transferred into trust

• Each trust has its own tax allowances

• Assets in trust can be loaned for beneficiary’s use and not ‘locked away’

• Available to individuals and couples

• Available for property whether mortgaged or not

• Settlor does not part with property during lifetime

• Value of assets in each trust should not exceed IHT (inheritance tax) nil rate band allowance.

Benefits:

• Assets can be passed to later generations in differing proportions and at different times e.g grandchildren, children of previous relationships

• Assets are protected from Remarriage, Divorce, Bankruptcy and are not available for financial assessment for Residential Care

• Assets can be protected for vulnerable beneficiaries and ‘problem’ beneficiaries.

• Ideal for Death in Service benefits

• Ideal for Business Assets

• Ideal for high value estates

Contact Prestige Tax and Trust Services for more information on setting up a Pilot Trust or for any estate planning help.

Update: Recently the HMRC have considered removing some of the benefits of these types of trust by assessing any tax payable as a total of all the trusts, not solely based on the amount held in each one. Therefore we urge you to act now to receive the full benefits of this approach.

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