The international life company, part of Old Mutual Wealth, said a survey of advisers from around the world, revealed almost half have used a trust instead of a will when assisting a client.
Gordon Andrews, technical marketing manager at Skandia International, said: “Interestingly, nearly half of all advisers, say they have used a trust instead of a will, highlighting the numerous advantages trusts can provide over wills.
“However, it’s not a case of one or the other, but more a case of understanding why clients could benefit from having both a will and a trust in place to help meet all their financial planning needs.”
Skandia explained the concept of a trust is a common law principle and may not be recognised in civil law countries. However, for many clients, trusts can provide more certainty and protection when compared to a will, which could be overturned if it is inconsistent with forced heirship rules which protect relatives of a deceased family member.
Furthermore, said Skandia, with a trust, clients are able to specify exactly who the beneficiaries are; this can be an absolute entitlement or a discretionary entitlement. In addition, and adding to the certainty favoured by advisers using trusts, the settlor can remain in control of the trust during their lifetime.
The second highest advantage cited by advisers was inheritance tax, with Skandia suggesting that for those advising UK clients or those with UK situated assets, IHT is a “Key” consideration and was voted top by advisers based in the UK.
Third highest was probate, as assets held within a trust sit outside the client’s estate and are therefore not subject to probate. Skandia said this has many advantages, but is most prevalent in scenarios where the proceeds from the trust can help surviving family members meet financial liabilities, rather than wait months “or even years” for the estate to be settled.
The life company pointed out there was an interesting regional split as to which advantage was considered the greatest. Advisers in the UK and Europe cited trusts not being subject to probate as the top advantage, while those in Asia and the Middle East cited more certainty and protection.
