The best way forward?

MrAPJI

I would appreciate any advice or comment from forum members on the following situation .

A family member has recently inherited a large sum of money (£520,000), and together with savings held with his wife, has about £800,000 held entirely in cash. He has approached me for advice and I've suggested he visits an IFA to discuss matters - he's reluctant to do so.

The couple are both in their early sixties and retired, with a joint pension income of £25,000 which is index linked. Their property is valued at around £400,000. Additionally, they have a severely disabled adult child living with them and wish to provide for in the future. I understand that a Will is not in place at present because they are unsure as to the best way to proceed with respect to the right kind of Trust etc.

To be honest, I'm rather out of my depth with this entire situation and hoping that forum members may point us in the best direction.

Many thanks for reading

xylophone

If they wish to set up a Trust for a vulnerable adult then they must take professional advice.

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

https://www.litrg.org.uk/tax-guides/disabled-people-and-carers/trusts-disabled-people

http://www.step.org/member-directory

They can hold the whole inheritance/savings safely in cash with NS&I while they consider their options.

https://www.nsandi.com/our-products

They could take advice from a SOLLA member.

https://societyoflaterlifeadvisers.co.uk/

Mr_Costcutter

Welcome to the Boards

May I suggest you start by taking a look at the following site https://www.mencap.org.uk/willsandtrusts as it will explain Discretionary Trusts to you in a way which is clear. Providing for a disabled child isn't easy and many people do find this charity really helpful.

MrAPJI

Thank you for your help xylophone and Mr Costcutter.

I was wondering - once a Trust has been established - are other family members able to leave (through a Will) money to the Trust?

BucksLady

I can't answer your question I'm afraid, but would urge the family concerned to choose their Trustees very carefully.

AlanP_2

They need professional advice as said above, for the Will / Trust and for investments.

What is their reluctance?

My much older sister & BiL setup a trust for one of their children that had a disability many years ago through a solicitor.

His two older brothers and I were the trustees and have dealt with things (the brothers mainly as they are nearby) since both the parents died.

No idea how much ot cost but it was worth its weight in gold to my nephew to have had this sorted out, explained to him & the trustees and "ready to go" at a moment's notice.

For general investment advice I second the IFA suggestion - that is a lot of money and along with the house value is taking them into IHT territory.

A combined IFA / Solicitor approach may be what is eventually needed as the recommendations need to be compatible and not working against each other

Linton

I agree with the others that professional advice both for setting up the trust and for investing is the way to go. It would perhaps be prudent for you not give them any advice beyond that.

MrAPJI

AlanP wrote: »

They need professional advice as said above, for the Will / Trust and for investments.

What is their reluctance?

Thank you for your advice .

My feeling is that their reluctance to make provision has been based on an underlying fear of making the wrong decision in respect of investments and the kind of Trust etc. However, I've made a note of the links kindly provided by xylophone and will share the information from these sources in order to take things further. I think you are spot-on in saying that a combined solicitor/IFA is the best way to approach matters - many thanks

BucksLady

MrAPJI wrote: »

Thank you for your advice .

My feeling is that their reluctance to make provision has been based on an underlying fear of making the wrong decision in respect of investments and the kind of Trust etc.

My parents were the same. I have a disabled sister for whom a Trust was established, but only quite recently and she is in her thirties. I'm sure there will be a great deal to consider, but when everything is settled I'm sure the couple concerned will feel tremendous relief that everything is sorted. Best of luck and I hope everything works out well

kidmugsy

MrAPJI wrote: »

A family member has recently inherited a large sum of money (£520,000)...
... they have a severely disabled adult child living with them and wish to provide for in the future.

They should see a suitably qualified solicitor soon because it may be that there will be an advantage in funding the trust by completing a Deed of Variation of the bequest that your kinsman received. In other words, he can divert money from his own pocket into the trust but it would count for IHT purposes as coming from the deceased. This might save a good deal of Inheritance Tax when your kinsman himself dies, or his widow dies. The window of opportunity for a DoV is two years from the death of the deceased.

There is another potential advantage of this route: it would be possible to fund a trust where not only would the disabled child be a beneficiary but so could your kinsman and his wife. That would mean that the money could remain available for their use if their disabled child should pre-decease them.

I write as an amateur not a lawyer. I haven't dealt with a trust for a disabled beneficiary but I have dealt with a DoV. Expert advice is what your kinsman needs; he mustn't let the two year window close without having the opportunity to take advantage of it.

MrAPJI

Kidmugsy, many thanks for your reply. Such useful information which we will investigate further - much appreciated