However, research from Quilter highlights government should not throw the baby out with the bathwater as trusts offer far more than tax efficiency and are a good financial tool during an age of increasingly complex family arrangements.
The research* revealed 75% of parents want to control how wealth is passed down to their children. While the vast majority would trust their spouse to distribute the wealth, the challenge comes when there are divorces and remarriage – which are on the rise.
The remarriage rate for men is currently about 25 per 1,000 and for women 12 per 1,000 suggesting more men tend to re-marry compared with women, according to the ONS.
This is causing sleepless night for some parents as nearly half (48%) are concerned about how wealth would be distributed to their children if their spouse remarried.
Consider trust planning:
Trusts are a legal arrangement which ring fences money for future distribution to stated beneficiaries. If a surviving spouse remarries then a trust protects the wealth, ensuring it remains in place for the intended beneficiaries.
This can be particularly useful where children or grandchildren are still young, and the parent wants to protect wealth for their future, and have controls in place as to how and when the children/grandchildren can access the money.
36% of parents would consider trust planning to help ensure their wealth is protected for the benefit of their children, with a further 41% of parents saying they may be interested in trust planning.
Rachael Griffin, tax and financial planning expert at Quilter comments:
“Trusts date back centuries, which means at first glance some people may think they are legal structures which are now irrelevant for most people in modern-day society. However, this couldn’t be further from the truth. In fact trusts may be having a renaissance.
“Complex families are increasingly the norm and with that has come a rise in the number estate disputes ending up in court. It’s vital the government consider how trust fit in modern day society and their consultation reflects their current usage.”
*Survey conducted by Toluna of 480 UK adults who are over 40 and married with children