discretionary trusts

Britannia12345

My parents are thinking of changing their will. My husband is disabled and will need me to care for him for the rest of his life. I cannot go out to work any more as I'm his full time carer.
If my parents leave me the proceeds of the sale of their house in their will we will lose our means tested benefits and will have to live on the savings.
My parents don't want this to happen as they've worked hard all their lives to pay off their mortgage and don't want us to have to live off the savings.
It's been suggested to them that they put it in their will that my share will go into a discretionary trust. This will mean leaving the money to myself and our children.
Is this a complicated thing to do? My parents want some advice before they go to see the solicitor about it.
Is it expensive to set up and use such a trust?
Who should they have as trustees? I have one sibling but no-one else who could run it.
Would we have to option to buy a house from the trust without it affecting our benefits (obviously we wouldn't need to claim housing benefit then)
Has anyone else had experience of this sort of trust?

Brynsam

I'm sorry you are in such a difficult position. Although you have given quite a lot of relevant information, it is nothing like sufficient to get the sort of help you are seeking.

Your parents don't need advice before they see a solicitor (make sure the solicitor is a STEP member) - they need to get if directly from the solicitor. On this and other public sites, there are rather too many people who confidently assert things which bear little relation to the actual legal position! Those who do know the law also know how dangerous it is to comment on the basis of inadequate background.

I hope that doesn't sound too unsympathetic, but your - and their - best bet is to seek professional advice sooner rather than later.

Keep_pedalling

How much is their estate worth? If we are talking about a subtancial sum I would have thought there is a good chance your legacy could generate more income than you receive in benefits.

A discressionary trust can be expensive to manage if you have to involve a professional as one of the trustees. Any income earned in the trust is also taxed very heavily.

SeniorSam

The advise above is correct. The solicitor needs to be one which is qualified by an organisation called STEP, so make sure the solicitor is STEP qualified by asking the question before you meet with the firm.. You can look up STEP qualified solicitors on the web.

Let me just say that if your parents gift their assets into a Discretionary Trust, then it cannot be said that you are the beneficiary even if you are stated as such. The 'named' beneficiaries could be you and your family, but can be changed later by Trustees if they all agree.

A Discretionary Trust means that the beneficiaries are determined by the Trustees, who can be your parents, you and others, but preferably someone who can manage the Trust funds if you cannot do it yourself. Family members are best, but knowing what to do is important, so you may need to have a professional Trustee. If so, make sure you agree on costs first as these can be very costly.

Make an appointment to have a no obligation chat with the STEP solicitor before taking action and make sure that everything is very clear in your own minds before moving forward

Good luck

Sam

Mojisola

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SCOPE has this advice -
https://www.scope.org.uk/support/families/will-trusts

Britannia12345

it was the scope page that we first looked at.

Britannia12345

The only other option we can think of is for my parents to leave their inheritance straight to our children.

Mojisola

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They could vary his will after his death to pass the value of the property straight on you and your sibling.

If you use an inheritance to buy somewhere to live, that isn't counted as deprivation of capital and you could continue to receive all the benefits (except HB, obviously).

Britannia12345

It's all so complicated!! I will have to see what my parents' solicitor comes up with. I'd love to hear from someone who has an direct experience of a discretionary trust and to see how they got on with it. I don't understand why they are taxed so heavily - it seems very unfair.

Yorkshireman99

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The average family solicitor is not qualified to advise you. You really must consult a trust specialist who is a STEP member,

Keep_pedalling

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There is nothing prevent you purchasing a house with your inheritance. Your benefits might be effected in the short term but converting the majority of your savings into home ownership would allow you t claim again, although you would certainly no longer require housing benefit.

You need to look at all options before leaping into the murky world of trusts.