Trust past 18?

jackyann

OP - yes, it is a slightly complex will. But do remember that you can change your mind - usually with a 'codicil', but we did completely re-do our wills when the family changed significantly.
You have the advice on 'discretionary' trusts and can discuss with your solicitor.
I would, at the moment, state whatever age, and whatever 'discretions' seem right to you and your partner / other family members, and discuss carefully with Trustees. I don't think there is a right or wrong answer, but your own and your family's experience, and understanding will be a good guide. You can change it in the future.

securityguy

It remains to be seen just how effective all these discretionary trusts that people with money have been setting up over the past few decades actually are. Many of them were set up to deal with IHT issues, and are now either unnecessary or ineffective. The actual successful execution of a trust (where successful is defined loosely as "achieving its tax planning intentions, not ripping the family to pieces and not pointlessly enriching professional advisors") can only be evaluated once it has been wound up, and the enthusiasm with which those who have set these things up assert their inevitable success is an act of faith as much (if not more) than certainty.

securityguy

Malthusian wrote: »

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.

I'd agree with every word of that.

I think the whole idea was that at 25 your children would be sensibly married and having children. Society has changed, and given that the overlap of "having children young" and "having parents with substantial assets" is diminishing in size, has less and less basis in fact.

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.

Indeed, again. And the repeated talismanic claim that discretionary trusts are inherently proof against Saunders can wait until there's a case: civil courts tend to look at intent rather than wording, and it's perfectly possible that a discretionary trust set up deliberately to defeat Saunders would be held to be artificial and therefore dissoluble. We won't know until a case finds its way to a reported court.

SevenOfNine

securityguy wrote: »

Indeed, again. And the repeated talismanic claim that discretionary trusts are inherently proof against Saunders can wait until there's a case: civil courts tend to look at intent rather than wording, and it's perfectly possible that a discretionary trust set up deliberately to defeat Saunders would be held to be artificial and therefore dissoluble. We won't know until a case finds its way to a reported court.

.......and yet you relentlessly dismiss discretionary trusts as if one has already "found it's way to a reported court" & been overturned.

Personally, advice from a STEP solicitor is always going to take precedence over the unknown quantity participating in a forum, qualifications &/or experience unknown.

Opinions regarding responsibility at 18, 19, 20, 21, 22, 23, 24, 25 are just that PERSONAL opinions, which could of course be coming from those who do not have the title of 'parent', merely expressing their own thoughts based on their experience of, well, nothing I suppose.

Malthusian

SevenOfNine wrote: »

.......and yet you relentlessly dismiss discretionary trusts as if one has already "found it's way to a reported court" & been overturned.

For most people a material risk that the arrangement they are setting up will find its way to a court and be overturned is as good as knowing that it will be. Because they want to leave their money to their children, not to a bunch of lawyers.

Many people who think they want to set up a trust have got this idea not because they think their children are wastrels in the making, but because they think a "trust" is a talismanic thing that will protect them against IHT or stop their children becoming wastrels or both. When they find that neither is true they reconsider the considerable expense and tax-inefficiency of setting one up.

Personally, advice from a STEP solicitor is always going to take precedence over the unknown quantity participating in a forum, qualifications &/or experience unknown.

Always? That's not rational decision-making, that's authority-worship. STEP solicitors are a valuable source of expertise who should always be consulted before setting up a complex Will arrangement; they are also known to talk rubbish from time to time. The nature of the legal profession is that 50% of lawyers are always wrong. (No matter how solid the argument there will always be a lawyer who will do his duty to argue the contrary position, and they can't both be right.)

If you go to a STEP solicitor and ask how to set up a discretionary trust, they will no doubt provide very good advice on how you can do so. What they are unlikely to do is ask you whether you really need or want to set up a discretionary trust in the first place.

Opinions regarding responsibility at 18, 19, 20, 21, 22, 23, 24, 25 are just that PERSONAL opinions, which could of course be coming from those who do not have the title of 'parent', merely expressing their own thoughts based on their experience of, well, nothing I suppose.

And since lawyers spend their careers studying law and not adolescent neuroscience or parenting skills, their opinion that an 18 year old is materially more likely to spend all their inheritance on crack than the same person at 25 is also a personal opinion.

Brighty

What good is a bare trust for young children who's parents have died, it's no good getting a huge lump sum at 18, if they've had to live in poverty until then because whoever became their guardian struggles to afford bringing up 2 more kids. I want a discretionary trust so that the monthly rental income can subsidise their upbringing, if needed. The trustees can then decide at what age 18-25 that they have the need and/or responsibility to hand over full control. If my kids are stupid enough to take the trustees to court to get it early and end up costing the trust, therefore themselves, thousands of pounds, then they deserve to lose the money the court case would cost.
Also, as my son has learning difficulties, he may grow up to lead a normal life, he may not. so he could need more money than his sister when he's older, if he can't work for example. I'd like the trustees to have the option, if my daughter is comfortable, to funnel more of the money towards my son

Malthusian

Brighty wrote: »

What good is a bare trust for young children who's parents have died, it's no good getting a huge lump sum at 18, if they've had to live in poverty until then because whoever became their guardian struggles to afford bringing up 2 more kids. I want a discretionary trust so that the monthly rental income can subsidise their upbringing, if needed.

You always have the option of leaving money to the guardian, if it comes to that. Of course they could spend it on themselves and leave the kids to live in the cupboard under the stairs, but the same applies if they are left an income. A lump sum upfront may enable them to purchase a big enough house to fit in two more children - this may not be the case for a variable rental income.

If my kids are stupid enough to take the trustees to court to get it early and end up costing the trust, therefore themselves, thousands of pounds, then they deserve to lose the money the court case would cost.

If Saunders v Vautier applies it won't go to court. The trustees will hand over the money. Otherwise they would be personally liable for wasting the trust's money on a hopeless case.

I'm not trying to dissuade you outright from setting up a discretionary trust, particularly with the new information about the children, only pointing out some of the things you need to bear in mind when you speak to a STEP solicitor.

Yorkshireman99

Malthusian wrote: »

For most people a material risk that the arrangement they are setting up will find its way to a court and be overturned is as good as knowing that it will be. Because they want to leave their money to their children, not to a bunch of lawyers.

Many people who think they want to set up a trust have got this idea not because they think their children are wastrels in the making, but because they think a "trust" is a talismanic thing that will protect them against IHT or stop their children becoming wastrels or both. When they find that neither is true they reconsider the considerable expense and tax-inefficiency of setting one up.



Always? That's not rational decision-making, that's authority-worship. STEP solicitors are a valuable source of expertise who should always be consulted before setting up a complex Will arrangement; they are also known to talk rubbish from time to time. The nature of the legal profession is that 50% of lawyers are always wrong. (No matter how solid the argument there will always be a lawyer who will do his duty to argue the contrary position, and they can't both be right.)

If you go to a STEP solicitor and ask how to set up a discretionary trust, they will no doubt provide very good advice on how you can do so. What they are unlikely to do is ask you whether you really need or want to set up a discretionary trust in the first place.



And since lawyers spend their careers studying law and not adolescent neuroscience or parenting skills, their opinion that an 18 year old is materially more likely to spend all their inheritance on crack than the same person at 25 is also a personal opinion.

You clearly have considerable bias against the legal profession. It sounds like you had a bad experience with them and, mistakenly, believe they are all the same. You have also made a number of glib, and frankly cynical, assertions such as "authority worship" about those who advise people take professional advice. The amount of free advice available on line makes some believe it is easy to dispense with professional advice in many fields. In certainly does mean that it is much easier to get an initial view but once it comes down to making life changing decions relying solely on advice from here, or any other internet source, is pure folly. Specifically regarding trust law it is probably the most complex speciality and the average High Street solicitor seldom has a full understanding, experience or expertise to deal with effectively. The law is becoming evermore complex and specialisation is much more common. I have no axe to grind for STEP members but to suggest that they generally would be so unprofessional as to arrange a trust without establishing what the client's real needs is plain wrong. Of course there will be good and bad as in any profession so you need to shop around.

Malthusian

Yorkshireman99 wrote: »

You clearly have considerable bias against the legal profession. It sounds like you had a bad experience with them and, mistakenly, believe they are all the same.

Wrong on both counts.

In certainly does mean that it is much easier to get an initial view but once it comes down to making life changing decions relying solely on advice from here, or any other internet source, is pure folly.

And I didn't advocate any such thing. I said the exact opposite in post #26 and #28. It's a bit of a waste of time to start personal arguments with other posters if you aren't going to read what they actually said.

I have no axe to grind for STEP members but to suggest that they generally would be so unprofessional as to arrange a trust without establishing what the client's real needs is plain wrong.

I have complete faith that a STEP member will do everything possible to establish the client's needs, providing they involve setting up a trust. When you are a hammer salesman, all your clients' needs look like nails.

securityguy

It's also worth pointing out, although emotions appear to be running a little high, that a discretionary trust whose beneficiaries are limited to the children of someone who is dead falls under Saunders v Vautier.

I, and others, who used "bare trust" simplified a little too much (what we sometimes call "over-approximation"). A trust falls under Saunders v Vautier if at the point at which the action is brought, all the beneficiaries are (a) known and (b) competent. Discretionary trusts which avoid this have to have undefined beneficiaries, ranging from "my children and grandchildren including those yet to be born" to "diverse persons as the trustees see fit". But both of those formulations can have, to put it mildly, unintended consequences. If you write a trust with defined beneficiaries, then the powers given to the trustees are irrelevant to this discussion: if all the beneficiaries agree to wind the trust up and are competent to do so, and there are no other potential trustees, that's the end of it.

And as Malthusian points out, if the trustees attempted to defend the action they would be personally liable for the costs, as the action is hopeless.

There have been, in other jurisdictions, proposals to change this rule (for example, here and here) but it is currently good law in the UK.

If you have access to a law library (I can't find a public copy of the judgement, but there may be one out there) I suggest people read In re SMITH. PUBLIC TRUSTEE v. ASPINALL. [1928. S. 1702.] - [1928] Ch. 915 to see how discretion for the trustees makes little difference.