As mentioned in the previous parts of our series, Trusts serve as an essential tool for asset protection, tax efficiency and long-term legacy succession planning.
Trusts are generally classified as either Revocable (can be changed by the Settlor) or Irrevocable (cannot be easily changed). A Revocable (or “Living”) Trust allows the Settlor to maintain control, change the terms or take back the assets at any time, thus offering flexibility, but fewer tax or creditor protections.
On the other hand, an Irrevocable Trust, once established, generally cannot be altered without the permission of the beneficiaries. While it requires from the Settlor giving up control, it offers much stronger asset protection by moving the assets entirely out of the Settlor’s legal estate, which can shield those assets from lawsuits, creditors, and heavy estate taxes.
By moving assets into the irrevocable trust, effectively removing them from their taxable estate, the Settlor can freeze the value of their estate for tax purposes, ensuring that future appreciation of those assets benefits the heirs without incurring additional heavy tax burdens related to the inheritance, thus securing a family’s financial legacy for generations.
Hence, the Irrevocable Trust is a much stronger legal shield, often used for comprehensive tax planning and long-term wealth preservation across generations.
Do you want to know more about Trusts, where and how to start setting up your own trust? Reach out to us at +44 20 3974 1244 or at office@bensonformations.com. We are ready to navigate you through this complex field to the right solution for you.
