An Umbrella Trust

The question of a single trust for two or more children - instead of frequently used separate trusts - is a point in planning you may want to review with your adviser. There are some pros and cons. London's Irving Trust Co. points to this example: Say you leave everything to your wife in trust for life, then to your three children. When you and she are gone, there's a net amount left of, say, £240,000. With an £80,000 trust for each of the three children, the annual trustee's fee runs roughly £1,000 - whereas a single £240,000 trust costs about 25% less.

And note: Besides this saving, a larger single trust gives the trustee more room to move in selecting investments. The portfolio can be broader, better balanced. This can, of course, be vital.

But there are cases where separate trusts might serve well - for instance, where the age spread of the children is great, or where there are substantial differences in their economic status. The point is - and on this, all advisers agree--this kind of decision depends a lot on the family situation. It's a case of weighing pros and cons.

Childless Couple's Trust

Childless Couple's Trust

The childless couple - or the couple whose children are already quite well fixed - might consider a "charitable remainder trust." This estate planning idea, which benefits a widow by saving a sizable slice of local estate tax, has come in for some favourable comment among the pros lately. And - you may be sure - from the fund raisers.

If a single man dies and leaves, say, £500,000, the local estate tax comes to roughly £115,000. if he's married, 50% goes to his widow tax-free - under the marital deduction - and the tax drops to £45,000. Now, figure in the charitable remainder trust. It works this way: The part of the estate that doesn't pass under the marital deduction... see: Childless Couple's Trust