THE TRUST DRAFTING SERVICETM
Who are the drafting company? Wills & Trusts Independent Estate Planning Ltd grew from our own need to generate high quality, high volume trusts for our own clients. The company was put in place solely to provide trust and legal services to Financial Advisers. Because of our extensive understanding of this area both as a legal tool and marketing tool we are ideally placed to provide this service to Financial Advisers.		The Trust Drafting ServiceTM Submission process Trust Newsletters  The Assurance TrustTM The Asset Preservation TrustTM The Mortgage TrustTM

The Solicitors
Bowman & Drew Solicitors are a firm specialising in Will drafting, Trust preparation and Probate. Unlike many solicitors practices, Bowman & Drew practice only in this area of law and so have extensive experience and knowledge in this area.

In Scotland Williams McRae Solicitors are a firm specialising in Wills and Estate Planning. Their welcoming approach is reflective of their dedicated team and it is little wonder that a high percentage of their new business derives from recommendations of satisfied existing clients.

In Northern Ireland George MacLaine is one of Northern Ireland's oldest and most respected firms of solicitors, delivering an efficient and personal legal service to both private and commercial clients. For over 180 years the firm

Introduction
Trusts have been misused and mis-understood for years. Many people think that trusts are reserved for the rich or that they are complicated and costly to set up. This may have been the case in the past, but it is not true today. There are many types of trust, but for most people trusts are used to ensure that certain assets are controlled properly and efficiently in the event of death. Without a relevant trust in place your clients children, spouse or other beneficiaries may not get what they are entitled to.

Inheritance Tax
Over the past few years more and more people have become affected by Inheritance Tax. In the event of your death, if you are passing assets to someone who is not exempt (for example a spouse or charity) then Inheritance Tax will be charged on any assets above the Nil Rate Band. The Nil Rate Band is the amount that you can pass without tax being charged. This means that if your estate is valued over this amount 40% can be payable in tax! This amount includes life assurance!
The effect of this is that your client may be paying for an insurance that pays 40% of its value to the taxman.

Probate
In the event of death, Wills are processed by Executors who apply for probate. Once this is done and probate is granted by the probate office then assets can be given to the beneficiaries, provided the inheritance tax has been paid. Unfortunately, granting of probate can take a long time, even if inheritance tax is not payable. Even in simple cases, probate can take three to six months to approve and in complicated cases, probate can last for years. Delays in Probate can have a destructive effect on your clients and their families. If your clients need the proceeds from life insurance to survive, then how will they manage if the payments of life insurance are not paid immediately.

Debts
Most of us have mortgages. And most of us, very sensibly have some form of insurance to cover them in the event of death or a critical illness. But what happens to the life insurance proceeds in the event of death? The answer is that, if the proceeds are not assigned to the lender, they are paid into the estate, swelling its value and potentially causing an Inheritance Tax charge. But more importantly, if there are other creditors to the estate (credit cards, car loans for example) the proceeds from life insurance intended to clear the mortgage may be attacked or claimed by other creditors instead of the debt dying your client. Not only that, but use of the insurance payout will not be permitted until probate is granted, which can take months or even years.

The Solution
A properly drafted Trust is the solution to all of these problems. A trust is a way for a third party (the trustee) to hold the assets belonging to another person (the beneficiary), often given to the trust by another person (the settlor). The Trust Deed is created to protect the assets within it from all of the above problems and many more besides. By placing a Trust Deed around insurance policies, death in service benefits and pension policies, you are protecting them from attack by other people. With a properly engrossed Trust Deed, life policies will not be liable to Inheritance Tax. In addition, the proceeds of the assets held within the trust will not be liable to probate, and will be paid immediately upon settlement of the claim to the beneficiaries.

Which type of trust?
There are many types of trust, but the three we most commonly use are:

The Assurance Trust™
The Assurance Trust™ is a trust that is used to hold Life insurance and Life Assurance policies. These policies are then paid to the trust upon death. Any critical illness benefits are still paid to the claimant directly and not into the trust. The funds within the trust will then avoid both probate and Inheritance Tax.

The Asset Preservation Trust™
This trust is a Spousal Bypass trust that is used to collect and hold the payments from employer death in service benefits and lump sum death payments from pension schemes. These amounts are outside of the estate. If the client dies and leaves them to a spouse they will then be in the spouse’s estate and potentially liable for Inheritance Tax when the spouse pass them to the children or other beneficiary. The trust keeps the funds from entering into the spouse’s estate and so avoids any inheritance Tax liability and yet allows the funds to be used and accessed by the spouse.

The Mortgage Trust™
If there is a mortgage and you want to clear the mortgage in the event of your death, through use of an insurance policy, you need to ensure that the proceeds of that policy pass to someone who can use them to clear the debt. This trust will ensure that the money goes to the right person at the right time so that the money from the policy can be used to clear the mortgage properly without any delay.

The Service
Our service is designed by and specifically for Financial Advisers. As Financial Advisers you know the importance of using a correctly drafted trust to ensure that clients insurance policies, death in service benefits and pension arrangements pass to the right person at the right time, without paying inheritance tax. But you are also aware of the legal problems associated in providing these services.

Problems
There are three problems associated with trust arrangements from an advisers point of view:

• If you do not put policies in trust you are being negligent. You are exposing the clients to the problems associated with Inheritance Tax, probate and creditors claims. Clients rely on their advisers to do the right thing, in the right way.
  
  
• If you complete a trust arrangement, YOU are then liable for its contents. If you complete it incorrectly, you can be persued by the client personally. As the adviser you also must have your Professional Indemnity policy cover this area.
  
  
• You rely on insurance company trusts. You may have noticed massive differences between each company’s trust documents. If they are all different, whose are right and correct? And what do you do as all the company’s say you must get independent legal advice?

The Solution
The solution is to avoid all of these problems by having individual bespoke trusts written for each of your clients by an independent third party and have that trust certified by an independent firm of specialist solicitors.

This has the following benefits to you:

• You pass on drafting responsibility to the drafting company
  
• Independent legal opinion is provided removing your responsibility in this area
  
• You can ensure that the trust created meets your clients needs exactly and so providing a much higher level of service
  
• A single Trust Deed policy can be used to hold multiple policies, significantly reducing your paperwork
  
• You can generate significant additional income
  
• You can obtain additional referrals from clients via the trustees

The benefits to the client are:

• They have an individually drafted trust
  
• They receive the benefits of independent legal opinion
  
• A single trust will cover multiple policies reducing paperwork
  
• More involved trusts such as The Asset Preservation Trust^TM can be provided which are not available through insurance companies
  
• The service is significantly lower in cost than using a specialist solicitor to draft trusts, without any reduction in quality.
  
• Protection can be given against Inheritance tax, Divorce, Re-marriage and bankcuptcy

Commissions & Fees
The fee for drafting, compiling, checking and certifying any of the trusts is listed in the chart below. Anything that you charge in addition to this will be returned to you as commission.

The Asset Preservation TrustTM	£144.00 plus VAT (£169.20)
The Assurance TrustTM	£134.00 plus VAT (£157.45)
The Mortgage TrustTM	£124.00 plus VAT (£145.70)

(Prices as of 1st April 2008)

A storage facility is also provided by Bowman & Drew Solicitors. The cost of this is £17.00 plus VAT per year. When you agree this with the client and complete the standing order mandate you will receive an additional £25.00 commission.

Using The Service
The first stage in using the service is to attend The Trust Development Workshop^TM.

This workshop will train you on the basics of using trusts and how they can be used with clients. Once you have attended this workshop you can obtain a licence to use the Trust Drafting Process^TM and begin to help clients right away