What is a Trust and Would it be Good for Me?If your glass is by nature half-empty, you didn’t need to look far for confirmatory information last month.
Energy bills were going up – and are set to rise even further in October. Inflation was up again – with grocery inflation hitting its highest level for 13 years, And, of course, the National Insurance rises introduced in April were starting to bite.
With the war in Ukraine looking set to continue through the year, it was no surprise, therefore, to see plenty of articles reporting that ‘optimism’ was at a new low.
‘Brits’ optimism tumbles to new depths,’ reported City AM. ‘Below financial crisis and Covid lockdown levels.’
According to the article, optimism in the UK had slumped to its lowest level ever. Researcher GfK started tracking ‘optimism’ in 1974 and in May it fell to minus 40 – down two points on the previous month and lower than at the height of the financial crisis in 2008, the high unemployment of the 70s and 80s and the depths of the Covid lockdowns.
Does this matter? After all, if you look at it objectively, living standards are better now than in the past and employment levels are significantly higher.
But looking at it objectively is one thing – consumer confidence is entirely another. And yes, it does matter.
In most countries, consumer spending makes up about two-thirds of all economic activity. So when the economy is expanding – and people feel confident about the future – they are prepared to spend money, especially on the traditional ‘big ticket’ items such as cars and household appliances. This spending drives more economic expansion, creating a virtuous circle.
At the moment, though, we have the opposite: consumers feel anything but optimistic about the future and are therefore less willing to spend. ‘Brits cut back on fridges and sofas’ as one of last month’s headlines had it. Reduced spending means businesses sell less, which in turn makes them less willing to invest and employ people – ultimately leading to a recession.
With inflation continuing to increase and everyone well aware that their energy costs will rise again in the autumn, there is going to be a continued reluctance to spend. Worryingly, the OECD recently forecast that the UK would have the lowest growth of all the G20 countries next year, with the exception of Russia. Unsurprisingly, their report called on the Chancellor to quickly implement tax cuts.
Whether Rishi Sunak is back in his ‘whatever it takes’ mood of lockdown is open to debate. What’s undeniable though is that the rising cost of living is driving the ‘optimism index’ to previously-unseen levels. The Government is likely to see that reflected in the ballot box at the forthcoming by-elections – which could well prompt the Chancellor to act.
What is a Trust and Would it be Good for Me?
Wednesday, June 29th, 2022If you have assets such as land, property, cars, money and investments, you’ll want to be sure they go to your chosen beneficiaries in the future.
That way you can be sure that your loved ones have financial stability in the future and that you’ve left them a meaningful legacy.
But hang on, doesn’t that sound a bit like taking out a Will?
Well, yes, but there’s a key difference in that a Will only comes into effect after you pass away, whereas a Trust can be implemented from the moment it is set up. That can give you the confidence, certainty and peace of mind you want moving forwards, so you can be sure your family will be provided for further down the line.
At the same time, setting up a Trust can also have many tax benefits, and means your chosen beneficiaries won’t have to go through the Probate process following your death.
So it’s well worth exploring this option, seeking professional financial advice and seeing if this is the way forward for you.
What types of Trusts are there?
There are several different types of Trusts you can look at, depending on your specific wishes and circumstances:
Will Trust
This could be a good option if you’re married or in a civil partnership, as it makes sure your surviving partner can continue living in your property following your death. It can also ensure a share of the property can be included in your inheritance.
Discretionary Trust
This permits trustees to decide how to use the income from the trust and choose how much money beneficiaries will receive. That means it’s a good option for those who want maximum flexibility if their circumstances change.
Bare Trust
This provides or allows for the option of passing assets onto a young person when they reach the age of 18. That means the assets in the Trust will initially be held in the trustee’s name, rather than the beneficiary’s, and the trustee will be responsible for looking after them until the chosen beneficiary hits the age when they are able to access the trust themselves.
Trusts for Vulnerable Beneficiaries
This is a good option if you have a chosen beneficiary who lacks capacity to make decisions for themselves, and will therefore need financial support and help with managing their affairs. This could include a child, an under-18 who has lost a parent, or somebody with a disability.
If you have any questions on setting up a Trust to protect your assets for the future, get in touch and we’ll be happy to help. We have the knowledge and experience to advise you on the different options open to you and help you determine which ones best reflect your specific wishes and circumstances.
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