For anyone unfamiliar with the detail and the nuances, it is easy to lump these three legal devices alongside each other, when, in fact, they are very different.

In this short article we wish to highlight this by making some simple points which, hopefully, can draw out one or two of the key elements, that represent how different they are.

A Trust can be thought of as a framework that can be used to wrap around or relate to property or assets, that can provide direction and protection.

Direction means that the document stipulates how the property/asset is owned, managed and allocated. Protection means that it can place the ownership into a different form, so, for instance, it has a different tax position, which may mean there is less tax to be paid on the asset’s growth in value or income produced. There are wider possibilities here, so trusts can be used to protect against third-party threats such as bankruptcy, or divorce, or a local authority claim in the case of care fees.

A trust is commonly used as a mechanism to help with more efficient management of property and assets.

A Will is an instruction from an individual as to what happens to their property and assets on their death. It can sweep up general instructions, for example to do with readings at a funeral, or non-monetary value gifts, such as who gets the family pet. It is a document which, simply put, is an expression of an individual’s wishes as what they want to happen when they die.

A Power of Attorney (POA) is a specific document which, again, provides an instruction, this time in relation to what happens if an individual becomes incapacitated in their lifetime. There are two types, one relating to health, the other to finances. In both cases, the individual is alive, but is deemed to be unable to make their own decisions, and the POA hands this power of decision-making to an attorney (say, a son or daughter) or to more than one, so that the other person(s) can make the decisions for the individual.

Each of these three “devices” have very distinct applications and cover different risks and scenarios.

Which is the most important? None.

Every individual should have all three, especially where there is an sizeable asset concerned. Or a reasonable level of wealth.

Many people self-select themselves out of needing trusts, thinking, incorrectly, they don’t have sufficient assets. However these same people often have significant life assurance policy payouts, that should be placed under trust.  It is not just about money in the bank, or a big house.

At the very least every individual who is in work, retired, or above, say age 40 should explore whether each of these devices is of use to them, and in most cases, this will conclude with yes – all three are.