Discretionary Trust

valueman1

dont-look-now - As a general rule and subject to how the Trust is managed the loan will generally be seen as separate from the matrimonial assets and therefore afforded greater protection for my son in this case if he divorced. I would want the best for my son and his children.
If the value of the property increased, equity would become available which could be used for other purposes, such as setting up a business or a care home.
A well drafted letter of wishes would clearly state how I wanted the money spent in the future.

bigadaj

All very odd, you don't trust your son to marry the right person, or waste the money without your ghost lurking over his shoulder, it's all very creepy and a bizarre idea have others have commented.

dont_look_now

If you were still alive, perhaps you'd be siding with your daughter-in-law, not your son. Or is your commitment to the patriarchy so great that there's no chance of that?

valueman1

I'm waiting to hear from someone who has first hand experience of these trusts, as I say they are common.

Doneby55

valueman1 said:

I'm waiting to hear from someone who has first hand experience of these trusts, as I say they are common.

I am the trustee of a discretionary trust with several beneficiaries including my children. It is, frankly, a pain in the backside, and if I had a choice (I'm not the settlor so don't) I wouldn't have bothered. If I were the settlor I would have gifted the money to the beneficiaries over time and just trusted them, taking time to build a good relationship with them so they understood my intentions for the gift, but with the understanding that ultimately I had no say in the matter, particarly when dead. Maybe if it was £2-3m+, the expense of running it and the potential for unintended consequences would worth the hassle, if I had specific concerns about the beneficiaries, or they had specific needs.

Shedman

As a matter of interest how do you intend the money in the trust to be held, eg cash, shares, onshore investment bond, offshore investment bond, as that could introduce further issues and complications and could influence the choice of fellow trustee(s).

I know from my experience of being trustee of a family trust, that despite being a qualified accountant, I have found dealing with trust matters, especially the tax side of things, quite a challenge and have concerns about how the other trustees would manage once I can't deal with it any longer.  Can't help with advice on low cost professional trustees but would certainly advise making sure that there was at least one other financially aware trustee on board.

valueman1

Sherman - I would invest in an accumulating global index fund in equities with one of the large providers like Vanguard. It would be onshore. Ideally, one trustee would be an accountant, the other a lawyer, or at least one experienced in acting as a professional trustee and aware of the tax and regulatory issues.

valueman1

Doneby55 - this is helpful thank you.

valueman1

Bigadaj - as they say ‘love is blind’ and 50% of marriages end in divorce. Better to prepare for the worst and hope for the best.  I wouldn’t want my grand children’s inheritance to end up with my son (or daughters) ex.

valueman1

If you were still alive, perhaps you'd be siding with your daughter-in-law, not your son. Or is your commitment to the patriarchy so great that there's no chance of that?

Possibly, but my default position is I would want my inheritance to benefit my own children and grandchildren.