There are different types of trust that can be used in a Will but the most common ones are:-
A specific amount of money or the whole of the residuary estate can be placed into a discretionary trust. The trustees have the power to give whatever proportion of the money to who they want to, (from a list of potential beneficiaries), when they want to and for whatever reason they want to. This type of trust is especially good when the testator feels it difficult to ascertain how much a certain beneficiary will need and when. This type of trust can be particularly helpful when making provision for to children of different ages, a disabled beneficiary, or other dependant beneficiaries. The trustees would be able to distribute the funds to who needs it and when, and in varying amounts. Any remaining monies can be kept invested until needed. This type of trust can last for up to 125 years from the testators death meaning that monies can even be kept for future generations. As the beneficiaries are only “potential” they have no right to any monies – only a hope. It is for these reasons that the monies can be protected against any bankruptcy, divorce, or means tested benefits of a potential beneficiary. A letter of wishes is usually placed with the Will giving the trustees guidance.
Life interest Trusts
This type of trust usually contains the family home and are often referred to as “Property Protection Trusts”. If the family home is held jointly then steps are taken to ensure that the family home is divided so that each owner now holds a specified share, usually 50% each in the case of spouses. The trust is usually used to ensure that the survivor of the spouses will always have somewhere to live, but that the first to dies share cannot be used to fund care home fees, or will be lost to a second or even third marriage, thereby ensuring that their share will ultimately go to their chosen beneficiaries (often their children) but without having deprived their spouse whilst alive. (Variations of this type of trust can contain other types of assets, can provide and income or can restrict the amount of time someone can continue to live in a property).