Inheritance Trust Horror!

ginfritham

Would be grateful for any thoughts/advice on this dilemma.
My husband and his brother are part of an Interest in Possession Trust, whereby they are set to receive a capital sum on the death of their father and he, being the third beneficiary of the trust (set up by his own grandfather) is already legally entitled to receive any income on the capital. He's been receiving the income, a fair sum, for about thirty years. The capital sum has shrivelled down to 80K due to no reinvestment of income or interest, plus the huge admin fees charged by the Public Trustees who have been manging the sum on the family's behalf.

The Public Trustees now want to transfer the admin of the trust to Capita, who charge a high admin fee too. The option we are considering is that my husband and his brother take on the role of Trustees themselves. Whilst this would save the admin fees, it seems to be fraught with potential disasters, not least of which is that they then would be responsible for not only investing the lump sum annually but paying their own father the income upon which he's come to rely.

The Trust has a clause which states that capital can't be claimed until after the father's death. By then I fear it will be non-existend.

Anyone got any suggestions on this? Even in the last two years the capital has fallen from £100k to £80k. We don't know its original value but are trying to get hold of the original documents. It was probably nearer £500k when taken out. Depressing.




Many thanks

Reestit_Mutton

ginfritham wrote:

Would be grateful for any thoughts/advice on this dilemma.
My husband and his brother are part of an Interest in Possession Trust, whereby they are set to receive a capital sum on the death of their father and he, being the third beneficiary of the trust (set up by his own grandfather) is already legally entitled to receive any income on the capital. He's been receiving the income, a fair sum, for about thirty years. The capital sum has shrivelled down to 80K due to no reinvestment of income or interest, plus the huge admin fees charged by the Public Trustees who have been manging the sum on the family's behalf.

The Public Trustees now want to transfer the admin of the trust to Capita, who charge a high admin fee too. The option we are considering is that my husband and his brother take on the role of Trustees themselves. Whilst this would save the admin fees, it seems to be fraught with potential disasters, not least of which is that they then would be responsible for not only investing the lump sum annually but paying their own father the income upon which he's come to rely.

The Trust has a clause which states that capital can't be claimed until after the father's death. By then I fear it will be non-existend.

Anyone got any suggestions on this? Even in the last two years the capital has fallen from £100k to £80k. We don't know its original value but are trying to get hold of the original documents. It was probably nearer £500k when taken out. Depressing.

Many thanks

It seems bizarre that the trustees were charging around 10K per year to administer the fund - that almost sounds criminal to me.

The only issue I can foresee is that the your husband and his borther would have a conflict of interest in becoming trustees as they are also ultimate beneficiaries...the tax man might look a little askance at the arrangement when your father dies and you could end up with a significant tax bill to pay as well.

It's best to keep an arms length relationship with these things if you can.

Methinks the forum may not be the best place for advice, you really need to seek out some legal/tax advice.

Reestit Mutton

cheerfulcat

Hi, ginfritham,

What a thoroughly depressing story, I'm so sorry. Your best bet is to go to a professional; the Society of Trust and Estate Practitioners is a good place to start looking for the sort of specialist you need.

HTH

Cheerfulcat

EdInvestor

ginfritham wrote:

He's been receiving the income, a fair sum, for about thirty years. The capital sum has shrivelled down to 80K due to no reinvestment of income or interest, plus the huge admin fees charged by the Public Trustees who have been manging the sum on the family's behalf.

So what's Dad doing for money? On capital of 80k, he's presumably now lucky to get 3k after charges?

Hardly a fair sum.