Death,property and childrens trusts.

gricefisher

I`m a 62 year old single father of an 11 year old daughter.Whilst I have no immediate plans to depart the mortal coil,I have to be realistic and face the possibility of dying whist my daughter is still young.My sister and her family are more than happy to look after her,should it ever happen,and although I haven`t talked about it to my daughter,I`m pretty certain she`d be " happy" with that option.For sure,she`d be well looked after.
I receive a draw-down pension but more imporantly own our house,rough current value,£140,000.How can I ensure that the house,on my death,is sold and the proceeds from that form a trust for my daughter,the trustees being my sister and her husband,plus possibly a third party such as a solicitor?
I realise I shall need a solicitor to ensure it is properly set up,but would like as much help,advice and guidance from anyone out there who has knowledge or experience on the subject,before spending what bit of money we have.

GDB2222

First of all, the terms you have set out above are pretty clear, so I expect a solicitor could work from that to draw up a will. You will need to specify at what age your daughter should get the money in her own hands. 18 is the norm, but it seems quite young to me for large sums of money. 25 may be better. You probably want an 'accumulation and maintenance' trust. Inheritance tax should not be an issue for you, as the nil-rate band is around £300k. (How much is in your pension draw-down fund?)

Second, it is pretty expensive to have a solicitor as a trustee, so just your sister and husband should be trustees.

Third, what you suggest about selling the house sounds pretty good, except I would leave that decision to be made by the trustees in the light of circumstances at the time. They might want to let the house out, rather than selling it.

Debt_Free_Chick

Think very carefully about a trust. A trust ties capital up, so the trustees can't get at it to use for the benefit of your daughter. Is that what you intend?

They can use the interest - but not the capital. You might want to think about leaving a certain amount, as a lump sum, to your sister to be used "for the benefit of my daughter". This would give your sister some money to enable her to buy things that your daughter might need or want.

Think about it this way ..... £140k is only £14k a year over 10 years. I'm not suggesting that your daughter will need £14k spent every single year, but it doesn't sound like a huge amount of money given that your sister will have to house, feed and clothe your daughter - presumably at her own expense. Unless, that is, you've already made provision for your sister in your will.

I've seen a number of trusts cause immense problems - and real financial difficulty - because the capital could not be accessed to provide for the person they were supposed to benefit.

Have a good think about this before you finally commit to a trust.

GDB2222

Debt_Free_Chick wrote: »

Think very carefully about a trust. A trust ties capital up, so the trustees can't get at it to use for the benefit of your daughter. Is that what you intend?

They can use the interest - but not the capital.

That's not correct. It depends on the terms of the trust.