Probate trusts are simple tools in estate planning. Their uncomplicated characteristics are at the heart of their sole purpose: helping avoid the delays that come with settling someone’s Will after their death.
Here are some further details on why a Probate trust can be so advantageous, but first things first, WHAT IS A PROBATE TRUST?
• It is a settlor-interested bare trust.
• The policy is owned by the trustees of the bare trust and not the client.
• As the original client is the beneficiary, the policy will still form part of their estate for IHT purposes.
SPEEDING UP THE DISTRIBUTION OF AN ESTATE
A grant of representation or probate can take many months, sometimes years, to obtain. Using a Probate trust means that the trustees own the bond, therefore
there is no need for a grant of representation to be obtained before the bond can be assigned to or the policy proceeds paid to, the beneficiaries of the client’s estate.
By using a Probate trust, the bond can be settled ahead of the rest of his estate as the trustees can pass the bond to the beneficiaries without the need to wait for probate and saving potential probate fees. This helps preserve the value of an overall estate, allowing more money to be distributed to the beneficiaries of his will.
REDUCING PROBATE FEES
Law Society guidance states that probate fees on assets other than the main residence, should be around 1.5% of the value. This will include any investments,
such as investment bonds. Therefore, a client could save an amount equal to 1.5% of the value of a bond by using a simple probate trust.
IMPLICATIONS OF A PROBATE TRUST
As the trustees own the bond, the trustees will need to sign for any transactions, such as fund switches or part surrenders. Should the client no longer want to use
the probate trust then the trustees can assign the policy back to the client. The trustees will have to make a death claim if the last life assured dies whilst the bond
is under trust.
If you’d like to speak to a professional about how you could benefit from a Probate Trust please get in touch.