Early Access to Inheritance (In Trust)

jplaw

Hi, this is my first post here and maybe a bit of a tricky one, but any advice or direction on where I might be able to find more information would be extremely helpful.

To put this as simply as possible on my fathers side of the family a distant relative passed away some years ago. With no immediate beneficiaries it came to my fathers mum and dad (my grandma and pa).

However, it came with the following conditions (I do not know why it came with these conditions);

> My grandma and grandpa could live on the interest only.
> When they died it was split between their siblings (my dad and his sister) and they could live off the interest only.
> When my father passes away the money will be split between me and my two brothers and we will be entitled to the lump sum.

This has led me to understand the inheritance is held in trust.

I guess my ultimate question is there any way I could get early access to the inheritance? or has anyone come across this way of handing down money through the generations before?

(Before the question is asked I do not wish to speak to my father about it for a number of reasons).

innovate

Your father is obviously still alive, and you don't mention whether his sister still is.

If you were to have early access, you would deprive your father, and possibly your aunt, of their interest payments. Which he/they presumably wouldn't be best pleased with?

Anyway, according to what you say, your father - - and possibly his sister? - need to have passed away before you can get the money.

McKneff

I'm sure we all wish your father and his sister (sounds like both of them would have to be deceased before you got any money) a very long and happy life.

Just curious, how much lump sum is involved.

RobertoMoir

jplaw wrote: »

(I do not know why it came with these conditions);

If I had to guess, I'd say it was to stop family members taking money that doesn't belong to them. For an example, see the rest of your question (I know you'll say that I've got it all wrong, but you ought to consider how your post appears to those of us on the outside looking in).

I guess my ultimate question is there any way I could get early access to the inheritance? or has anyone come across this way of handing down money through the generations before?

1) Probably not. Simply put, as you have explained things, it isn't your money yet. Simple As.

You should consult a solicitor if you believe you have a legitimate claim to the money and/or the trust is being mis-managed, etc.

2) Not this exact precise example, but yes, its not unheard of for bequests to be made in wills with certain conditions attached to them.

jplaw

Hi Robert

This is correct, it is due to people potentially claiming access to it who are not rightly entitled and my father being a bit 'blinkered' at the moment (for want of a better word).

We are talking 7 figures so you can probably understand my concern.

I think a solicitor is probably the wisest option right now.

For those also concerned I am in no way wishing anything bad to happen to my dad or sister in any way shape or form, just trying to protect the family and rightful claimants.

xylophone

This looks like an "interest in possession" trust? http://www.hmrc.gov.uk/trusts/types/IIP.htm

"From an Income Tax perspective, an interest in possession trust is one where the beneficiary has an immediate and automatic right to the income from the trust after expenses. The trustee (the person running the trust) must pass all of the income received, less any trustees' expenses, to the beneficiary.
The beneficiary who receives income (the 'income beneficiary') often doesn't have any rights over the capital held in such a trust. The capital will normally pass to a different beneficiary or beneficiaries in the future. The trustees might have the power to pay capital to a beneficiary even though that beneficiary only has a right to receive income. However, this will depend on the terms of the trust.
Example
Stanley is married to Kathleen. On his death Stanley's will creates a trust and all the shares he owned are to be held in that trust. The dividends (income) earned on the shares are to go to Kathleen for the rest of her life. When she dies the shares pass to the children.
Kathleen is the income beneficiary. She has an 'interest in possession' in the trust as she is entitled to the dividend income from the trust assets for the rest of her life. Kathleen has no right to the capital. When she dies the trust ceases and all the capital (the shares) passes to the children."



The Trustees must administer the Trust according to the Trust Deed.
http://www.anthonygold.co.uk/cms/document/pw__trustees.pdf
http://www.hmrc.gov.uk/trusts/trustee/responsibilities.htm

Mojisola

jplaw wrote: »

For those also concerned I am in no way wishing anything bad to happen to my dad or sister in any way shape or form, just trying to protect the family and rightful claimants.

Isn't the money best protected by leaving it safe in the trust?

YesWillMan

It sounds to me like a Discretionary Trust. In such a Trust the Trustees decide from the possible beneficiaries which of them and bow much they receive as it is at their "discretion". The potential beneficiaries are those listed usually by the person making the will either by name or by relationship i.e. "grandchildren".

So it is possible that the Trustees could make a payment to you. Or the will may allow a payment in advance of your ultimate entitlement that is then deducted from such eventual entitlement. It depends on the wording in the will but there is a
Statutory powers that are available under the Trustee Act.

So your best thing to do would be to approach the Trustees and/or get a copy of the Will as the wording therein is

Aegis

jplaw wrote: »

Hi Robert

This is correct, it is due to people potentially claiming access to it who are not rightly entitled and my father being a bit 'blinkered' at the moment (for want of a better word).

We are talking 7 figures so you can probably understand my concern.

I think a solicitor is probably the wisest option right now.

For those also concerned I am in no way wishing anything bad to happen to my dad or sister in any way shape or form, just trying to protect the family and rightful claimants.

Surely the rightful claimants are currently your grandparents or your father and his sister? They're entitled to enjoy the income that arises from the capital until they all die, at which point the remaindermen will become the rightful claimants. Until then you're only a contingent beneficiary and do not have any legal right to the capital if the trust is as described.

As long as they are currently only spending the income that arises, I don't know how you could possibly be successful with a legal claim against the trustees, but maybe there's more to this that you haven't mentioned yet?

Aegis

YesWillMan wrote: »

It sounds to me like a Discretionary Trust. In such a Trust the Trustees decide from the possible beneficiaries which of them and bow much they receive as it is at their "discretion". The potential beneficiaries are those listed usually by the person making the will either by name or by relationship i.e. "grandchildren".

So it is possible that the Trustees could make a payment to you. Or the will may allow a payment in advance of your ultimate entitlement that is then deducted from such eventual entitlement. It depends on the wording in the will but there is a
Statutory powers that are available under the Trustee Act.

So your best thing to do would be to approach the Trustees and/or get a copy of the Will as the wording therein is

It sounds much more like an interest in possession trust (mentioned by xylophone above), in which case the trustees would not have discretion to distribute trust capital to the remaindermen as they see fit.

The problem is that any payment made from capital now will reduce the income generated by the trust assets irrevocably, which will disadvantage the life tenants of the trust. As such, the trustees are likely to be bound to restrict access to trust capital until the terms of the will have been met (i.e. until the life tenants of the trust die).

There's nothing wrong with asking for a copy of the trust deed, but it's quite possible (and indeed likely) that there is no legal way to make the trustees distribute capital.

Itismehonest

Aegis wrote: »

It sounds much more like an interest in possession trust (mentioned by xylophone above), in which case the trustees would not have discretion to distribute trust capital to the remaindermen as they see fit.

The problem is that any payment made from capital now will reduce the income generated by the trust assets irrevocably, which will disadvantage the life tenants of the trust. As such, the trustees are likely to be bound to restrict access to trust capital until the terms of the will have been met (i.e. until the life tenants of the trust die).

There's nothing wrong with asking for a copy of the trust deed, but it's quite possible (and indeed likely) that there is no legal way to make the trustees distribute capital.

I tend to agree &, while there may be a family member (e.g. currently father or his sister) who the trustees might consult over aspects of the trust the trustees are normally not bound to do as that person wishes.