The Succession Trust Frequently Asked Questions Make A Simple Calculation Apply For A Succession Trust

Frequently Asked Questions

1. What is The Succession Trust (TST)?

2. Who can set up a Succession Trust?

3. What can I protect in TST?

4. What are the benefits of using TST?

5. How much can I put in TST?

6. Can anything be placed within TST?

7. Can assets be added at a later stage?

8. Can I access my savings that are in TST?

9. When should I set up my Succession Trust?

10. Why are Trustees needed?

11. Who should I appoint as my Trustees?

12. Can I change my Trustees at a later date?

13. How long does my Succession Trust last?

14. How does my TST work with my Will?

15. Can I move house if it is in TST?

16. I have a mortgage; can I still protect my house?

17. I have limited savings; can I release equity in future?

18. Does TST affect my house insurance?

19. What happens if I am declared bankrupt?

20. How do I apply?

21. How much will TST cost to set up?

22. Are there any ongoing costs?

23. Will I receive copies of TST documentation?

24. What is the next step?

 

1. What is The Succession Trust (TST)?

A Trust which gives you the right to any income received by the Trust and the right to live in the Trust property rent free for life.
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2. Who can set up a Succession Trust?

Anyone over the age of 18, and who is of sound mind, which means that you understand the effect of your actions and its potential consequences.
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3. What can I protect in TST?

The Trust can hold a number of assets, but is primarily designed to hold your main residence (or your share of it)
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4. What are the benefits of using TST?

The avoidance of the requirement to obtain probate on death, so that your Beneficiaries can access funds within TST quickly. The assets in the Trust are normally disregarded for care purposes so ensuring that the Trust fund is retained should you need long term care. The Trust also ensures that assets are transferred to your nominated Beneficiaries and they cannot be disinherited by say, your spouse remarrying. The Trust also protects the assets in the event of your children getting divorced and there are additional inheritance tax benefits for your children as the Trust fund is not regarded as part of their estate for Inheritance Tax (IHT) purposes.
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5. How much can I put in TST?

We normally recommend that a client puts assets into the Trust up to a maximum of the Inheritance Tax (IHT) nil rate band (2011/12 is £325,000) per individual. An individual can put in up to this amount once every seven years, without triggering any tax charges.
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6. Can anything be placed within TST?

It is normal to protect your main residence and your savings within TST. If you place investment properties into TST, this may trigger a charge to Capital Gains Tax if transferred into the Trust. The same is true of shares and other assets that may have a built-in gain.
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7. Can assets be added at a later stage?

Yes. You can add assets to your Trust as the threshold rises and the seven year limit expires, although there can be Inheritance Tax (IHT) benefits of creating new Trusts after seven years. Care is needed to ensure that any further assets transferred are not regarded as deliberate deprivation of capital for care fee purposes.
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8. Can I access my savings that are in the TST?

You are free to have access to any of the assets at any time.
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9. When should I set up my Succession Trust?

We would normally advise you to put this type of Trust planning in place as soon as possible, and particularly whilst you are in good health and of independent means.
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10. Why are Trustees needed?

Trustees are appointed to hold Trust assets on behalf of the Beneficiaries and in doing so act in an administrative capacity. Trustees are granted powers under the terms of the Trust and are governed by strict Laws that state that they must act for the benefit of the Beneficiaries at all times. Trustees are specifically prevented from benefiting from the Trust by Law unless they are also a beneficiary.
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11. Who should I appoint as my Trustees?

We usually recommend the appointment of Independent Professional Trustees and AAP Trustees will act for you in this capacity. This helps to ensure that the Trust adheres to Trust Law and that the annual tax returns are also made to HMRC. In order to protect your interests, you would usually also be a joint Trustee.
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12. Can I change my Trustees at a later date?

When your TST is set up, you appoint the Trustees in a separate deed. You are granted the power to hire and fire Trustees. If you wish to change your Trustees, you can also do so at short notice and at any time while you still have mental capacity.
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13. How long does my Succession Trust last?

Under English Law, a Trust can last up to 125 years, at the end of which any remaining assets in the Trust must be distributed to a living beneficiary.
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14. How does my TST work with my Will?

The assets in the Trust are treated separately from the rest of your estate and will pass to your successors in accordance with the Trust Deed. It may be appropriate to review the contents of your Will as a result.
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15. Can I move house if it is in the TST?
Yes. The Trustees will always grant permission for you to sell the house on their behalf and the proceeds to be used to acquire a more suitable property. If you choose to downsize to a property of lesser value, the cash that has been released can remain protected within the Trust.

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16. I have a mortgage; can I still protect my house?

Yes. The mortgage lender has a first charge on the property and the Trust will register a beneficial interest on the residual equity.
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17. I have limited savings; can I release equity in future?

Yes, as with a standard mortgage, the Equity Release Company will have a first charge on the property. The Trust then has a second charge that works in conjunction with your equity release scheme.
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18. Does TST affect my house insurance?

Insurance companies are used to insuring Trust properties and this will not be a problem. It is important to notify them of the change so that the policy is not invalidated. As Trustees, we will notify the insurance company as the new owners of the property.
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19. What happens if I am declared bankrupt?

If you have transferred assets to TST and are made bankrupt within two years of the transfer, then the courts have the power to set aside the transaction.
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20. How do I apply?

You can contact us on Telephone number 01270 613 852 to discuss your requirements or use the online contact forms click here. Once you have completed the initial application form, we will review the details to ensure that this type of Trust is suitable for you. If TST is suitable, we will send you our Letter of Engagement and request some additional documentation and payment to establish your Succession Trust.
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21. How much will TST cost to set up?

The cost of setting up an individual Succession Trust is £2,600. However where there are two people in the same home, the second person will receive a discounted rate of £1,350. The above fee includes a contribution to the Trust bank account.
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22. Are there any ongoing costs?

As Professional Trustees, we make a small charge on a monthly basis to cover the administration of TST and cost of annual tax returns and any additional professional Trustee duties that may be required. We currently charge £20 pcm but again offer a discount to a second person in the same household of only £15 pcm. These fees will be paid by standing order. There may also be additional Land Registry fees.
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23. Will I receive copies of TST documentation?

Yes. We will send you full copies of all documentation along with a full Letter of Recommendation.
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24. What is the next step?

If you would like to make a simple calculation to see how much you can protect for your chosen Beneficiaries by setting up a Succession Trust please either click here or select Make a Simple Calculation from the above menu. . If you would like to enquire further you can contact us on Telephone number 01270 613 852 to discuss your requirements, or use the online contact forms click here.
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If you would like to apply for a Succession Trust please click here or select Apply for a Succession Trust from the menu above.

Alternatively you can call us on 01270 613852;

To fill in an on-line contact form [click here] or write to us at:

AAP Trustees Limited
Unit 2 Morston House
Princes Court
Nantwich
Cheshire
CW5 6GD

You may also email us at: info@aapTrustees.co.uk

 
 



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