What to do with discretionary trust?

Malthusian

My father's will directs the trustees as follows: "I give the NRB legacy to the trustees to hold upon the following trusts. The trustees shall have power to appoint the whole or any part of the capital and/or income of the NRBLegacy Fund upon trust for or for the benefit of such of the Discretionary Beneficiaries at such ages or times, in such share, upon such trusts and in such manner generally as the Trustees shall in their discretion think fit"....(few clauses about appointments) "subject as above, the Trustees shall hold the capital and income of the NRB Legacy Fund upon trust for such of my daughters (names my sister and me) as are living at my death and if both in equal shares between them, provided that if either die before me etc....(we haven't).

The first part appears to say that the potential beneficiaries are the mother, children and remoter issue, spouses/widows of children and remoter issue, and charities, and the trustees have absolute discretion on how much to distribute to each of those and when. The second part appears to say that the beneficiaries are you and your sister in equal shares.

This sounds contradictory to me but perhaps I'm overlooking how the legalese works - I'm sure someone will correct me. But either way, once the mother has been removed as trustee, there is nothing that says you can't distribute half of the trust to each of you and wind the trust up. You will be doing exactly what the second part says you should be doing, and the first part says it is one of the numerous possible things the trustees have discretion to do.

We have bought her a care home fees annuity to cover care home costs for life (rises with inflation) so together with her investments and savings, it is effectively impossible to imagine a scenario where she could even make inroads into her capital.

Just to cross this particular T, the scenario is that either care costs would increase more than inflation, as they generally do (for this reason it is common for care annuities to escalate at 5% fixed, rather than inflation) or she develops further health problems which require a higher level of care, meaning her care fees increase. But if her investments and savings are large enough to absorb any such increase, such that the possibility of her needing funds from the NRB trust remains extremely remote, this isn't an issue.

Even if there was a theoretical possibility that the mother might need funds from the NRB trust to pay her care fees, the trustees either have absolute discretion not to give it to her (under the first part), or she isn't a beneficiary anyway (under the second part which says the trust is for the daughters only).

I wouldn't expect the Court of Protection to be quick - you may be looking at several months.

xylophone

The trustees shall have power to appoint the whole or any part of the capital and/or income of the NRBLegacy Fund upon trust for or for the benefit of such of the Discretionary Beneficiaries at such ages or times, in such share, upon such trusts and in such manner generally as the Trustees shall in their discretion think fit"....

"The Discretionary Benficiaries" shall mean: 1) my wife 2) my children and remoter issue 3) the spouses widowers etc of my children and remoter issues 4) charities"

I am no expert, but as far as I can see, nothing in the above says that your mother should have first call on the assets or income of the trust.

Are you saying that your father has only recently died or died within the last two years and nothing has actually been done to set up the Trust?

If this is the case, as your mother is "incapax", should she be appointed anyway?

And is there any chance of a Deed of Variation?


If the Trust is in existence, was she "incapax" when it was set up?

You say that you have taken a solicitor's advice but is he an expert in Wills and Trusts?

If not, it may be worth your while seeking an expert opinion.

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