Bloodline Trusts
Create a bloodline trust to protect your family's inheritance and ensure your assets are distributed according to your wishes. Bloodline trusts, also known as discretionary trusts and family protection trusts, are a type of trust that allows you to designate and gift to a range of potential beneficiaries, while preserving the assets from exposure to divorce or diversion out of the bloodline and maintaining control over the assets. The expert wills, trusts, tax, and succession planning solicitors at JMW are here to help you safeguard your estate so that it benefits you and your direct descendants, including children, grandchildren, and other blood relatives.
Whether you need assistance in creating a new bloodline trust or optimising and managing an existing one, our expert trusts solicitors are able to provide the guidance you need. Speak to the experts at JMW today by calling 0345 872 6666, or fill out our online enquiry form to request a call back at a convenient time.
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Our Bloodline Trust Services
Our team of expert solicitors at JMW can leverage decades of experience to help you develop a comprehensive and effective bloodline trust structure. We provide tailored assistance in setting up a new trust, advising on alternative options that may also benefit you, and overseeing the administration process to make sure everything runs smoothly.
Our bloodline trust services include:
- Setting up new bloodline trusts: we assist in the creation of bloodline trusts and advise on your estate planning requirements and implement your wishes for your estate. This includes detailed guidance on structuring the trust to benefit your direct descendants, such as children and grandchildren, while safeguarding family assets from potential risks and implementing inheritance tax planning.
- Optimising and managing existing trusts: if you already have a trust in place, we can help optimise its structure to better protect your assets and fulfil your long-term goals. We can review your existing trusts to ensure they remain compliant with current laws and tax regulations.
- Alternative estate planning options: in addition to bloodline trusts, we provide advice on other estate planning solutions that may offer additional benefits. This includes exploring different types of trusts and legal structures to find the most advantageous setup for your unique situation.
We integrate and optimise protections to safeguard your wealth from:
- Divorce proceedings: protect your assets from being divided in the event of future divorces within your family.
- Bankruptcy: shield your wealth from creditors if any beneficiaries face financial difficulties or bankruptcy.
- IHT mitigation: diverting assets into a trust can result in reducing the value of the estate that is then exposed to IHT upon your death. It is a useful tool to reduce the value of your estate, while still maintaining control of the assets that you are giving away.
- Other taxes: address other tax liabilities, such as Income Tax and Capital Gains Tax, to maintain the value of your estate
- Control over distribution: you can specify the terms and conditions under which the trust’s assets are distributed, providing for your descendants’ health, education, maintenance and overall welfare.
- Adaptability for blended families: for those with blended families, the trust structure supports the equitable distribution of assets among all direct descendants, and protect the interests of children from previous marriages or relationships.
- Maintaining family wealth: the trust structure helps preserve the family's wealth across generations by preventing assets from being diluted or lost to external parties or events. This long-term preservation ensures that your descendants continue to benefit from your hard-earned legacy.
Our solicitors work closely with you to understand your goals and tailor our services to meet your specific needs. Whether you require hands-on assistance or professional advice, we provide the support necessary to help you manage your estate in the most beneficial way. At JMW, we are dedicated to helping you protect your family's inheritance and achieve peace of mind for future generations.
What Is a Bloodline Trust?
A bloodline trust, also known as a discretionary trust, is a legal arrangement designed to protect and manage your estate for the benefit of your intended beneficiaries. The advantages of setting up a trust in your lifetime includes allowing you to provide for your family, whilst preserving the assets and retaining control of the distribution of the assets.
A trust structure allows you to specify a range of potential beneficiaries and maintain control over how and when the assets are distributed at the discretion of the trustees. This can be particularly useful if you want to protect your family’s inheritance from scenarios like divorce proceedings, bankruptcy, or financial immaturity by a beneficiary. It provides an additional layer of security to keep your hard-earned legacy within your bloodline and a useful inheritance tax planning tool to reduce the size of your estate upon your death.
By setting up a bloodline trust, you can be reassured that the assets in the trust are ring-fenced and managed by the trustees in accordance with your wishes. We can assist with preparing a detailed letter of wishes to guide the trustees on how to make decisions and implement your wishes.
What Is the Process of Setting Up a Bloodline Trust?
Setting up a discretionary trust can be complex, and requires bespoke legal advice to assist with the preparation of a bespoke drafted trust deed and accompanying advice. Our solicitors at JMW can assist to navigate and support you through the process efficiently by:
- Initial consultation: the process begins with an initial consultation with one of our experienced solicitors. During this meeting, we will discuss the composition of your estate, the assets that are suitable to put into the trusts, and your intended future goals and desires for the family wealth.
- Tailoring the trust: based on your initial consultation, we will work with you to tailor the trust to meet your exact requirements. This includes selecting the beneficiaries (whether children, grandchildren or other direct blood descendants) and specifying the conditions under which the assets will be distributed.
- Drafting the trust deed: our solicitors will draft a comprehensive bespoke trust deed that outlines the terms and conditions of the bloodline trust. This deed will detail how the assets are to be managed and distributed, so that your wishes are clearly articulated, legally binding and enforceable.
- Choosing trustees: it is crucial to ensure the trust is managed by suitable trustees that you trust. Trustees are responsible for managing the trust assets and seeing to it that the terms of the trust are followed. You can choose family members, friends or professional trustees to oversee the administration of the trust.
- Valuing and transferring assets: once the trust deed is finalised, the assets will need to be transferred into the trust. Our solicitors can assist and liaise with third parties and suitable advisers to ensure the trust assets are appropriately transferred, for example preparing stock transfer forms or transferring funds/property.
- Addressing tax implications: setting up a bloodline trust has tax implications, including on IHT, Income Tax and Capital Gains Tax liability. Our solicitors will provide expert advice on the tax consequences of your decisions and help you structure the trust to minimise tax liabilities. This may involve planning for lifetime transfers and utilising available tax reliefs.
- Registration and compliance: depending on the nature and value of the assets, the trust may need to be registered with HMRC and other relevant authorities. We will handle the registration process and make sure that the trust complies with all legal and regulatory requirements.
- Ongoing management and reviews: after the trust is established, our solicitors can help you to review it periodically to ensure that it continues to meet your family’s needs and complies with any changes in the law.
Why Choose JMW?
Our dedicated wealth protection solicitors have helped many clients to protect their assets and understand the complex requirements of wills, trusts and estate law. Our private wealth solicitors have decades of experience in managing valuable assets and high net-worth estates. We understand the intricacies of estate planning and can provide you with the right advice on how to ensure your family’s wealth is protected and your beneficiaries are looked after in your absence.
Several of our solicitors are members of the highly respected Society of Trust and Estate Practitioners (STEP), an organisation known for its expertise. JMW has also received numerous accolades for our high standards of service, including being recognised in the prestigious Chambers & Partners and the Legal 500 guides, and winning Team of the Year at the Manchester Legal Awards.
We have extensive experience assisting a wide range of clients, including families, business owners, entrepreneurs, sports professionals, entertainers and charities. Our team is adept at handling complex requirements and tailoring our services to meet the unique needs of each client.
Our team is composed of dynamic solicitors who are well-versed in the latest developments in estate planning and succession law. We understand the environments you operate in and the need for bespoke solutions that reflect your specific circumstances and goals. This experience governs our approach to trust and estate practice at every stage.
By choosing JMW, your estate will be managed by a team of professionals dedicated to preserving your hard-earned legacy and securing your family’s future. Contact us today to learn more about how we can help you with your bloodline trust and estate planning needs.
FAQs About Bloodline Trusts
- What is a bloodline will?
A bloodline will is a will that includes provisions for creating a discretionary trust after your death. This means that your assets will be placed into a trust specifically designed to benefit your chosen beneficiaries, such as your children and grandchildren without gifting assets to them outright. This protects your wealth and makes sure it remains within your family line.
By incorporating a trust into your will, you ensure that your assets are managed and distributed according to your wishes, providing long-term security for your family's inheritance.
- Do discretionary trusts pay tax?
Discretionary trusts, including bloodline trusts, provide you with greater control over your assets; however, this comes at a cost. A transfer into a lifetime trust is classed as a chargeable lifetime transfer. This means that if you transfer more than £325,000 into the trust within any seven-year period, you will have to pay a 20% IHT immediately on the excess amount.
In addition to this, discretionary trusts are subject to Income Tax and Capital Gains Tax on the income and gains generated from the trust assets. There may also be periodic charges of IHT every ten years, albeit often in smaller amounts. Our advisors at JMW can guide you through the tax implications of establishing a trust and help you weigh the advantages and disadvantages effectively.
- Who serves as the trustee of a bloodline trust?
The trustees can be a family member, friend or a professional trustee, such as a solicitor or trust corporation. Choosing trustees should be a decision based on who is trustworthy, reliable and capable of managing the trust according to your wishes. Trustees are responsible for managing the trust assets, delivering compliance with legal requirements, and distributing the assets to beneficiaries as specified in the trust deed.
At JMW, we can help you select the most suitable trustees and provide professional trustee services if needed.
- What are the drawbacks of a bloodline trust?
While bloodline trusts offer significant benefits, they also have potential drawbacks that should be considered:
- Assets within a bloodline trust can only be used for the health, education, maintenance and/or support of your beneficiaries. This restriction ensures the assets are used responsibly, but may limit flexibility for other financial needs.
- Once a beneficiary receives their inheritance, it can be commingled with the assets of their spouse. In the event of a divorce, these commingled assets may be subject to equitable distribution, potentially reducing the inheritance.
- Grandchildren from a first marriage could be unintentionally disinherited by the complexities of a second marriage. If the trust assets are not managed or designated properly, the inheritance intended for the grandchildren could be redirected.
- If trust assets are distributed to your children and then commingled with their spouse's assets, there is a risk that your grandchildren could be disinherited if your son- or daughter-in-law mismanages the combined assets.
While these potential drawbacks exist, if the trust is structured appropriately and you are advised on the risks, the disadvantages can certainly be outweighed. At JMW, our team can help you navigate these challenges so that your trust is set up and managed effectively.
Talk to Us
If you want to protect your family assets by setting up a trust structure, contact JMW today to find out more about our services by calling 0345 872 6666. Alternatively, let us know that you would like to hear from us by filling in our online enquiry form and we will get back to you.
