Trusts - Common Myths And Misconceptions

Lorraine Wilson explores five common misconceptions about trusts.

Trusts can be a useful tool in estate planning, enabling an individual to provide for their chosen beneficiaries by alternative means rather than an outright gift. There are many types of trusts which serve distinct purposes and have different financial and tax consequences. However, it is often misunderstood what the benefits of trusts are and how they work.

Trusts are only for the wealthy

Trusts can be useful for a variety of reasons. Trusts are most commonly used as part of an individual's estate planning to suit the needs and circumstances of beneficiaries rather than the high value of their estate. For example, trusts can be a sensible means of providing for disabled or vulnerable beneficiaries who may be unable to manage their own affairs, or where there are concerns about a beneficiary's spending habits, so an additional layer of protection is desired.