Leaving Property in a Will Trust
Unlike a Lifetime Trust, you establish the terms of a Testamentary Trust in your Will, and it becomes effective upon your death.
Will Trusts are typically utilised by couples who own the family property as ‘tenants in common’ Instead of leaving their share directly to each other, they each leave it to a Trust that is established upon the death of the first partner.
Complex Will Trusts were historically a common method of avoiding inheritance tax (IHT). A couple potentially liable for IHT may divide their estate into two portions, each of which falls below the nil-rate band.
Since 2007, however, married couples and civil partners can transfer their unused IHT allowance to one another if certain conditions are met. As a result, most couples are no longer required to establish this form of Trust for inheritance tax purposes; however, it may be used to shield the deceased spouse's share from care home assessments.