Will with discretionary trust for kids

marc1

My wife and I are writing wills. We have 2 kids 2 & 4 yrs. There are no kids from other relationships, No ex's. All simple. IHT is not an issue.

We want to write (mirror) wills that, where upon execution the spouse has predeceased the testator, establish 2 (maybe 3) named trustees (whose agreement we have) whose role it would be to set up a discretionary trust for the upbringing of the kids. The trustees would further administer and disburse money to the kids' guardian (who will not be a trustee).

Based upon other friends and family wills that I have seen, the will simply states "discretionary trust" and states its purpose; I assume it would be up to the trustees to do the legwork of how exactly the trust is set up, where the money is invested, what proportion of the capital is nibbled away dependent on the needs of the kids, etc. I see no reason to get into any more detail than this as we trust our executor and trustees. Is this more or less correct?

The wills would be changed when the kids reach the age to be independent (or if other circumstances change).

I have read the numerous other threads on DIY wills, the pros and cons. We will get this checked over by a solicitor. It is a pretty simple scenario.



Thanks

[FONT=&quot]Marc1[/FONT]

SmlSave

Sounds right to me Marc1

gratefulforhelp_2

Sounds right to me and is what DH and I have done. Get a decent solicitor to do it for you, have you appointed guardians for the children?

pusscat

We have done something similar but one point we had not thought of (but the Solicitor advised) is to make sure you have 3 Trustees, that way you can never have a deadlock if two disagree. You could use any odd number I suppose but having 5 Trustees is a recipe for trouble in a normal small trust - if you have millions it may well be different though.

Puss
xx

marc1

thanks for feedback y'all

yes, gratefulforhelp we have appointed guardian for the children (who will not be a trustee - we think this is prudent just in case of conflict of interest)

NIce suggestion pusscat on 3 Trustees = no deadlock if two disagree (do not have millions !....kids are only 2 and 4 !)

One other thing. A mate let me see his WHSmith DIY will pack. WHSmith reccomend that executors should be the same people as trustees (even for their "straight to the kids" will version). I do not agree. The executor does all the work immediately after the death but then is, as were, free to go. The trustees need to stay in the game til the kids reach age of independence, possibly 15 odd years or more in our case. At least for the people I am thinknig of, these are two different profiles. I guess WHSmith were just being lazy. Anyone else thoughts on this?

thanks

Marc1

MotownFox

Take care when naming Executors and Trustees as different people that the wording is correct as most wills refers to Executors as xxxx i.e. names them and then says hereinafter called my Trustees as the general trustee powers most wills have in them are needed in case a Trust arises such as child(ren) under the age to inherit.

Take care the Discretionary trust is worded correctly otherwise it could fail and the list of potential beneficiaries should include others than just your children such as parents/brothers/sisters - all named As the Trust must be truly discretionary. However how the Trustees pay out the money/circumstances can be done via a Letter of wishes (NOT put in the will) by which you can put your feelings and how you would like the trust to operate and outline any special circumstances that money can be paid over and above normal - say for instance if a child had a life threatening illness etc.

Not forgetting the Trust has to be registered after death with HMRC and an annual Tax Return completed and payment of additional rate tax made (can be done annually) as well as basic rate tax. Also Trustees need to organise that if income is paid out that the tax certificates relating to such payments can be issued to the beneficiary so that the tax can be refunded if the payee is a non tax payer or if a basic rate tax payer the additional rate tax can be refunded.
Ever wondered why Solicitors usually deal with Trusts - this is one of the reasons. There is also the investment aspect as the Trustees must invest the money not just stick it in the Bank/Building Society.

Baggysdad

We have done something similar but one point we had not thought of (but the Solicitor advised) is to make sure you have 3 Trustees, that way you can never have a deadlock if two disagree.

There's a solicitor who doesn't know what he's talking about. Trustees have to act unanimously - unless the trust document/will says otherwsie.

I have to say that I think the OP is making his Will unnecessarily complex. What he wants to achieve can be done using a straight forward trust for minors with the trustees having appropriate powers to advance trust funds to the children. Money can be made available for the guardians too. A trust for minors has the advantage that if a sum greater than the inheritance tax threshold goes into the trust, its more tax efficient than a discretionary trust. His estate might be low now, but inheritances and insurance payouts can lead to your estate growing before, or on, his death.

As to executors and trustees - it is usual for them to be the same because the work is similar and the type of person who makes a good executor will make a good trustee. But you can have different people.