Credit Unions Unveiled - Wealth-Wisdom Wednesdays

What are Credit Unions? Not for profit financial cooperatives owned and controlled by members.



How did they begin?

They started off in America and Canada and were based on the premise that people could help each other via a cooperative. Before 1979 there was no legal structure so some early CUs were formed under the Companies Act and others under the Industrial and Provident Societies Act. In April 1979 the Credit Union Act came became law. There are some 40,000 CUs around the world with about 118m members and just over 3/4 million members in the UK.



How can this organisation help me? A CU can help you in at least two ways (initially). 1. Learning to save regularly and 2. Borrowing. Some also offer other services such as... Current accounts and even Child Trust Funds and a new area they are moving into is Life insurance. You should contact your local CU office for more details of their individual services.



What are the joining requirements? CUs usually have a Common Bond which means their membership is based on certain factors, such as, Association, Employment, Live or Work or Residence.



What are their borrowing requirements? These vary, generally you must be a regular saver before they will borrow you any money. These loans are usually unsecured and are charged at a fixed rate. There are no set up fees, no hidden charges or repayment penalties.



What do I need to do once I find my local organisation? You will need to contact them and i. probably fill out an application form, ii. Pay a one of membership fee, iii. Complete a standing order form to begin your savings journey.



How are they able to loan money at much better rates? Because they are run by members for the benefit of members.



What is the maximum I can borrow? This varies from one organisation to the other and each application is assessed based on merits



What if I want to withdraw my money after I've been saving for a while? Quite simply fill out the form for your CU and they will usually send you your money back within about 5 days. Allowing time for processing.



Will I receive interest on my savings? Rather than paying interest, income from loan repayments is used to meet their running costs. They also keep some of the money in reserves and pay a dividend payment into your account.



There is no Credit Union in my area, what can I do? You can contact the Association of British Credit Unions to find out about any other options.



How can I be sure my money is safe? Since 2002, CU's have been regulated by the Financial Services Authority (FSA) in the same as UK banks and building societies. This means that the Financial Services Compensation Scheme will repay deposits up to £50,000 (as with banks etc).



I'm unhappy with my local Credit Union, what can I do? Follow their complaints procedure and if you get stuck, your complaint can be taken to the Financial Ombudsman Service.



Who governs Credit Unions in the UK?

The Association of British Credit Unions is the main trade association for Credit Unions in Britain (England, Scotland and Wales). The ABCUL provide information, representation and training to member Credit Unions.

So what's a Living Trust and do I need one? - Wealth-Wisdom Wednesdays

What is a living Trust? A living Trust is an estate planning tool. It must be written to be valid. It is referred to as a living Trust because it is written and used while you are alive. It is also referred to as a revocable inter vivos trust.

Can a living Trust be changed in my lifetime? Yes so long as it is a revocable trust.

Do I need a living Trust? If you have any assets and you would wish for these assets to be held in trust for your beneficiaries you should give it serious consideration.

What assets should I include in my trust? The assets do not need to be listed in the trust document, however it is a good idea to have some sort of addendum to the trust so that the Successor Trustee knows which assets are being administered. It will certainly make their job easier and they will thank you enormously.

Who should I appoint as a Successor trustee? Any one you trust implicitly with your life and your assets. Choose wisely for they will have complete control of all your assets and you will not be around to question their actions

Which assets should I consider including in this list? Any property you own, life insurance policies, investments and savings and any other substantial assets you would like to pass to your beneficiaries when you are gone.

Do I also need a Will? Probably to 'sweep up' any other assets that may have been omitted from the Trust

What are the key characteristics of a Trust? A trust document must be written as a trust instrument and must contain the names of the Grantor, The Trustee, at least one Successor Trustee and the names of the Beneficiaries.

Is it expensive to create a trust? This depends on who you ask and how you choose to go about creating a trust. A deed of trust can be created and drafted by you or you may choose to hire a Solicitor to write it for you. Should you choose to ask a Solicitor, ensure you understand what you want from your trust otherwise this can be very expensive.

I've heard a Will becomes public in probate. What about a Trust? Correct. A trust is a private document outlining ownership of private assets.

Can a trust be contested? Yes, but only in Civil court. A Will on the other hand can be contested in the public probate court.

Once I have created my trust what next? You will need to finalise the transference of your assets into the name of the trust. Failing this, your assets may well become subject to Probate and this can be time consuming and costly.

Remember, this article does not constitute legal advise. You must always ensure you fully understand the legal rules and requirements before entering into any contract or undertaking. If in any doubt, always seek independent professional advice.