Trust past 18?

Brighty

SevenOfNine wrote: »

Be particularly mindful if part of your house will form some of the ££££ dropping into the Discretionary Trust. This is no longer beneficial with the implementation of the Main Residence Nil Rate Band. Your home must not drop into a Trust to take advantage of that, it has to pass to a family member.

Thanks for the info and heads up on that

Our estate will consist of our house, plus a half share in 3 rental properties (or the full share should the other owner, my unmarried childless brother, die before me and leave me everything). There's currently little other assets or investments

So therefore, we'd need to leave the house to the kids in a bare trust, accessible at 18, but making use of the main residence nil rate band, then the rentals and the monthly income from them, in a discretionary trust till they're 25?

Is it also possible to throw in a life interest trust into the mix? Can we each leave everything to the kids on the first death, in bare and discretionary trusts as above, but with a life interest trust for the surviving parent?

Sounds like i need an expensive will, already been quoted £500+VAT just for a pair of mirror wills with life interest trusts

Malthusian

Brighty wrote: »

I was unaware of the different kinds of trusts. I was led to believe that from previous threads here, that no matter what kind of trust or how it was written, it could be accessed at 18, however i was told differently by a step solicitor and owner of a trust company (just in conversation, i am not their client), just wanted to check he wasn't talking nonsense.

It depends on the exact terms of the trust. Briefly, if the trust has been set up in such a way that there are potential beneficiaries other than your child(ren), Saunders v Vautier doesn't apply, as you need the consent of all potential beneficiaries. If you are going down this route you need a STEP qualified solicitor who can advise you on exactly how to ensure this is the case.

But the more important consideration is why you are setting up a trust in the first place. Do you think it's likely that your children will blow all the money if they can demand it at 18? If you left your assets to the other parent is it likely they'd run off with it and leave your children with nothing?

Brighty

Malthusian wrote: »

It depends on the exact terms of the trust. Briefly, if the trust has been set up in such a way that there are potential beneficiaries other than your child(ren), Saunders v Vautier doesn't apply, as you need the consent of all potential beneficiaries. If you are going down this route you need a STEP qualified solicitor who can advise you on exactly how to ensure this is the case.

But the more important consideration is why you are setting up a trust in the first place. Do you think it's likely that your children will blow all the money if they can demand it at 18? If you left your assets to the other parent is it likely they'd run off with it and leave your children with nothing?

If my brother dropped dead tomorrow, then my wife and I were to both die, we'd be looking at around a £1mil estate. Kids are only 4&6, who know what sort of teenagers they'll turn into, but that's alot of cash to get landed with on your 18th birthday
The above is obviously on the second death, on the first, i'd ideally like it to go to the kids rather than the wife, just in case she were to get married again then drop dead before she got round to making a new will.

Mojisola

Brighty wrote: »

If my brother dropped dead tomorrow, then my wife and I were to both die, we'd be looking at around a £1mil estate.

It could be worth your brother leaving his estate directly to your children.

getmore4less

A life interest(done by will) means the value(and the nil rate band) stay in the estate of the survivor, even though they are not the eventual beneficiary.

as M. says it could make sense for the brothers shares to by pass your estates.

In a situation where they(kids) are possibly going to inherit a rental business getting them involved early might be a good idea.
(not yet, mid-late teens)

Brighty

getmore4less wrote: »

In a situation where they(kids) are possibly going to inherit a rental business getting them involved early might be a good idea.(not yet, mid-late teens)

6 & 4, perfect chimney sweeps?

Anthear

I think it depends on what sort of Trust has been set up by the Will. If the money is held in a Bare Trust, then it is correct that they can access the money from 18. Does the Will stipulate an age.

You probably need advice from a solicitor who can tell you what sort of Trust it is.

BTW - it's a nightmare - and an expensive one. I am going through all that too and I think the whole idea of Trusts is simply to divert the money that would go to HMRC in tax, to solicitors, who charge it as fees! But that's just the cynic in me!!!

securityguy

"The last time I made this point you countered by saying essentially that the trustees would be failing in their duty if they didn't do so."

If that was aimed at me, no, I didn't, and in fact I argued precisely against that point.

securityguy

But to show the wonders of discretionary trusts being run by solicitors, a recent thread from this very forum:

https://forums.moneysavingexpert.com/discussion/5646671

Malthusian

securityguy wrote: »

If that was aimed at me, no, I didn't, and in fact I argued precisely against that point.

Apologies, it was of course Yorkshireman, and in retrospect I have no idea why I thought it was the other way round

Brighty wrote:

If my brother dropped dead tomorrow, then my wife and I were to both die, we'd be looking at around a £1mil estate. Kids are only 4&6, who know what sort of teenagers they'll turn into, but that's alot of cash to get landed with on your 18th birthday

It's a lot of money to get landed with on your 21st or 25th birthday as well. I would venture that a child is less likely to blow their money at 18 than at 21, maybe even 25. At 18 they've only just left school, they may still be living with you, and unless they're completely off the rails they should still be very much under your influence as a parent. (*edit* Or in the event of your death, the other parent or their guardian.) If they're going to acquire a drug / gambling / Scientology habit, it's more likely to be at 21, when they'll have been at uni for 3 years, or if not at uni, renting a flatshare with other young people. That's three years of being exposed to every temptation available without your oversight.

At 25 I would frankly be insulted to find that my parents believed that I'd only just become sensible enough to be given some money.

The law is clear that while there is a risk that an 18-year-old adult might blow all their money, the same is true of a 25, 30, 40, 60 or 80-year-old, and this isn't sufficient reason to deny them access to money they are entitled to.