Discretionary Trust - most effective way to set up

roadweary

Hi,

My son is 14 with severe special needs and will never be fully independent - I imagine/hope he will attain happiness/a degree of independence living n a form of sheltered accommodation/community in the future.

I have a property that I rent out that is intended as his inheritance - the mortgage is still being paid off.

Life assurance through my work will pay off any outstanding mortgage on that property on my death.

I have an ex (never married) who is the primary carer (against my wishes), we are on very bad terms, I do not trust her intentions, and my family and I are very clear that we do not wish her to manage/benefit from any inheritance on my son's behalf.

We believe a Discretionary Trust is the best financial vehicle for him.

As my parents are in their 80s they are pushing me to get a Discretionary Trust set up asap so they can adjust their will so that any inheritance for him goes into that.

Further down the line the idea is that the house, once mortgage free, is sold and the proceeds put into the Discretionary Trust.

Can anyone please advise of the most cost effective (ie cheapest but still doing it correctly) way of setting up the Discretionary Trust. My next task will then be to create a will that deals with the arrangements for the sale of the investment property and any other matters on my death etc.

Many Thanks,
R

getmore4less

research trusts more.

vulnerable person trust may be more appropriate


who do you plan to be the trustees?

Tigsteroonie

You've probably already looked there, OP, but for anybody else who has less of an understanding of the options, Mencap have some informative guides and run information sessions on the topic.

https://www.mencap.org.uk/advice-and-support/services-you-can-count/wills-and-trusts-service/about-our-wills-and-trusts

AnotherJoe

The most effective way will be by getting specialist legal advice rather than doing it on the cheap and having it all go to pot.

roadweary

getmore4less wrote: »

research trusts more.

vulnerable person trust may be more appropriate


who do you plan to be the trustees?

Hi,

I appreciate the advice and will take a look. My selection of the Discretionary Trust was based upon attending a Mencap event on planning for the future of special needs children - but of course there is always more to learn / consider.

I need to inform myself more but the intention was to assist as much as I can myself with my brother (who is a fully qualified accountant) assisting with the paperwork and taking over in the case of my death.

Then, once the rental property is sold, and hence there is a sizeable chunk of cash in the Trust....for him to take a view of whether he continues to manage it....or whether he chooses to hand it over to somebody like Mencap to manage.....obviously the upside is they have specialists but the downside is they, of course, charge for their services.

LHW99

I don't know much about these kind of trusts, but my feelings would be there is setting it up - and there is ongoing management.
Ongoing management can be changed if need be, as you say, but if its set up wrongly in the first place it could leave things in a bad mess. So I would make sure the setting up is done by someone legal

roadweary

AnotherJoe wrote: »

The most effective way will be by getting specialist legal advice rather than doing it on the cheap and having it all go to pot.

Yup - I have tried to be clear that I wish to do it properly....that's often neither the cheapest nor the most expensive option.

enator

We set up 2 x Discretionary Trusts for our kids & it was only £1,200 via a STEP lawyer, along with £400 p.a. to administer it.

roadweary

Tigsteroonie wrote: »

You've probably already looked there, OP, but for anybody else who has less of an understanding of the options, Mencap have some informative guides and run information sessions on the topic.

https://www.mencap.org.uk/advice-and-support/services-you-can-count/wills-and-trusts-service/about-our-wills-and-trusts

Hi, Yes, just re-reading their info. I'll call tomorrow to try to understand about the 16k minimum required for making the Trust active. This is my point....the likely sequence of events is:

1. Setting up the Trust.
2. Some investment when (morbid as it feels to discuss) my parents pass on.
3. Major investment when I pass on, the mortgage is paid off and the house is sold.

I'm not so much trying to avoid the cost of setting up the trust through Mencap (£305) but the situation where either the money from my parents is insufficient to activate the fund.....or it starts to attract admin costs that are excessive in terms of the money in there.

So it may be more effective to de-couple setting up the Trust initially, from the Mencap management.

I hope that makes sense?

Thanks,
R

roadweary

enator wrote: »

We set up 2 x Discretionary Trusts for our kids & it was only £1,200 via a STEP lawyer, along with £400 p.a. to administer it.

You see £400 p.a. to administer a fund that will have the minimum (£5?) starter investment and then for possibly many years will only have a few thousand in it, seems a bad way of preserving the money for my son....

xylophone

Make sure that you/your parents use a solicitor who is expert in Wills and Trusts.

http://www.step.org/for-the-public

https://www.gov.uk/trusts-taxes/trusts-for-vulnerable-people

http://disabilitytaxguide.org.uk/other-tax-issues/trusts-for-disabled-people/

Who will be the Trustees?

http://www.greenwoods.co.uk/knowledge-base/private-client/trustees-duties-and-responsibilities/

Will specialist investment advice be required?