What types of trust are used?
In many wills, trusts are created on death to hold assets. Known as discretionary will trusts, these were predominantly used to save inheritance tax. However, since transferable IHT thresholds were introduced, negating the need from a tax perspective, will trusts are now used purely for asset control or protection. Pension death benefits can easily be paid into a will trust. Alternatively you could set up a spousal bypass trust to accommodate the pension death benefits. An unfortunate name that sounds like a medical procedure, a spousal bypass trust (SBT) is a simple discretionary trust. The main difference between a SBT and a will trust is that the will trust is created on death, where as the SBT needs to be established before death. Setting up a SBT with your solicitor is straightforward and shouldn’t cost more than a few hundred pounds. While you are doing this it makes sense to review your will at the same time. Once you have decided what types of trust to use, simple (and free) no
