Estate Allocation Trust (EAT)
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Owning assets can be a great blessing, but they can be a great burden when you come to pass them on. This is where an Estate Allocation Trust comes into its own.
These are Trusts which you set up in your lifetime. They are like having a safety deposit box to which you hold the key as you can continue to be a trustee of the Trust, and in control of the assets. They can protect you and your family from damage to your estate from many areas, including:
Administering assets after death can attract huge fees payable to banks and legal professionals. These can be significantly reduced by means of an EAT.
One way of getting help with your finances if you lose your mental capacity is to draw up a Lasting Power of Attorney. Another way is to set up an EAT, under which your nominated trustees (normally your family) have full control of all your assets in these circumstances, and with the Probate Trust route there is no court registration procedure to go through.
If a house or other valuable assets are in the sole ownership of an elderly person or elderly couple, then these assets are much more likely to fall foul of unwise decisions or fraudsters.
Subject to certain conditions, placing your assets in an EAT will mean they are not seized if you (or your children after your death) should go bankrupt.
Claims on your Estate
Some people worry that claims may be made on their estate when they die by people they would not want to inherit (ex-wives, estranged children etc.). All assets in an EAT are safe from such claims.
Anyone who remarries faces the problem that if all their assets go to their new spouse when they die, their own children may be disinherited. Setting up an EAT avoids this problem by keeping your assets for your own bloodline.
Children with Problems
Children with problems such as alcohol, drugs or gambling or just plain overspending would benefit from some independent control over their inheritance, which an EAT can provide.
Is the plan useful for Inheritance Tax (IHT) planning?
This type of Trust is not designed for lifetime IHT planning. However, there could be inheritance tax savings on a generational basis. If you have an IHT problem we will ensure that you receive specific advice on that.
Placing your assets into your Estate Allocation Trust should ensure that they pass to the people you want them to after your death, per the terms of the Trust.