Discretianary Trust questions

weezie7

getmore4less and Tbagpuss - Thanks for replies, most helpful! Need that Trust deed document! Then have to think about how to move forward.


Lots of food for thought!

euronorris

It would be a good idea for the POA's to review your stepmum's financial position now that she is in a care home, get financial advice if necessary (to ensure that she has sufficient funds to meet her care needs for the remainder of her life - it's worth noting that these may increase if she is now losing capacity), and liaise with the trustees over this.


If the POA's can clearly evidence that stepmum is completely financially independent, and will have no need to benefit from any of the trust funds, then, DEPENDING on the terms of the trust and the wishes that your Father may, or may not have set out, they may be more inclined to wind down the trust.


Equally, if it is likely that your stepmum's personal finances will be exhausted in the near future, the trustees may decide to keep the trust in place so that she may benefit from an income stream from the trust, or indeed a capital payment. Again, depending on the terms of the trust, and any wishes that your Father may have previously set out.


This is a complex area, both legally and financially. The solicitor is best placed to answer any legal based questions, but a financial adviser will be required to ensure the best outcome for the trust funds (both investment wise, and tax wise), as well as any financial implications for your stepmum (income from a discretionary trust is not subject to financial assessment by the Local Authority, for example, should your stepmum's capital fall below the threshold and make her eligible for financial assistance from them). These may be some of the reasons your Dad setup the discretionary trust in the first place. If the trustees are aware of this, it may well be that their intention is not to wind up the trust until your stepmum passes away.

weezie7

Thanks euronorris.


As you surmise, stepmum is completely financially independent of the Trust. We anticipate that she could live to 120 and still have money left over, taking into account more care needs, inflation etc!


Advice has already been sought from an IFA and The Trustees have been sent the report with the plans of what we are going to do.


I aim to find out what the Trust Deeds say, so hopefully enlightening us.


Stepmum will have to pay for her care for her life, so we are aware that we need to plan for this.

weezie7

euronorris - just had another thought, the accountant is the only person who knew Dad personally and had dealt with him for a number of years. I suspect, that the solicitor is being rather cautious and appears to be taking a paternalistic view to the situation, and not viewing the wider picture which shows stepmum is financially independent. We all understand need to provide for care fees, and want to do this.


One of the things going to happen is the investments to be changed to provide income for the care needs, as there is a small shortfall, as the investments have not been reviewed since some time before Dad died (4 years ago), hence the input of an IFA. Solicitor and accountant are aware of all of this.

Mattygroves2

You may not find a separate Trust Deed as it would be usual for the will to set up the Trust if it only came into being on death - certainly the case for both my late in laws and my husband. Both my in laws had letters of wishes though were attached to the copy of their wills in the filing cabinet - they weren't held with the originals.

It would usually set out the potential beneficiaries (which would usually include future generations as well as the current existing ones), any restrictions on possible investments and possibly whether everyone was entitled to capital or just income. Other than that they tend to be as vague as possible to give the maximum discretion to the Trustees. It is the letter of wishes which guides the Trustees and it may be in your case that was done verbally by your father whilst he was still alive. Although the letter of wishes is a guide it doesn't mean the Trustees have to follow it.

You can ask the Trustees to wind the Trust up as beneficiaries but the decision is up to them. Equally it is up to them how they distribute the eventual proceeds - it doesn't have to be equal. They may feel that as long as your stepmum is alive your father would have wanted to make sure she was OK even if that means being cautious - which to me would mean she could fund care easily from income alone ie keeping her capital intact.

weezie7

Thanks mattygroves2 am speaking to the solicitor today about it all. Also they have sent us accounts which are wrong!!! Not half of the house money in the Trust....... interesting where it has gone! Sherlock Holmes is on it now!

weezie7

Just to close this, I, eventually, was put onto the Trust as an alternative to stepmum. I had, with POA, sought IFA and took details to a meeting with the other Trustees, (accountant has known me for many years, the solicitor only met twice). However, very productive meeting, as I had all financial details with me for how much stepmum spends and they agreed that necessity for Trust for paying stepmums care home fees was not necessary, as they could see she was financially independent. They then wound up the Trust and paid out.


Good outcome all round, eventually!


Thanks for all replies and help on this forum.