Willed money to sons.

Hectors_House

I don’t know if this is the right place for my query but I hope someone can advise.

My partner has written his will to split his estate equally between his three children.

One is married and solvent, the other two are currently on benefits and he’s not sure they will work again.

He has set his will up to feed £10,000 per years to the two that are unemployed.

I was thinking this will impact their benefits.

The money purely cones from the assets their father will leave behind (his house and some savings), not from income derived from rental of his property when he is gone.

Im assuming this will have an impact on their entitlements.

Thanks.

Keep_pedalling

By the sounds of it his will sets up a discretionary trust fo provide annual income for the 2 on benefits, but whether they receive income from the trust or a one off lump sum it is going to effect all means tested benefits so I can’t see any point in doing it that way.

gettingtheresometime

My initial thought is where is the money going to be held in the meantime ? Who is going to be responsible for it?

xylophone

The husband might leave a sum of money in a fully discretionary trust with potential beneficiaries being his wife/children/ grandchildren/remoter issue.

This would mean that no beneficiary had the right to any money from the Trust but the Trustees might choose to make distributions from time to time.

The  Trustees of the Trust might be the  OP and the solvent son. They would need to open a bank account as Trustees of the Trust.

Those on benefits are permitted a certain amount of capital before benefits are reduced - the Trustees would only gift such amounts as would not cause the beneficiaries to lose their benefits.

However, the taxation of Trusts is complex and the OP's husband would need to take  advice from a solicitor expert in Wills and Trusts.

Below might be worth a look for information only.
https://www.simpsonmillar.co.uk/media/what-is-a-discretionary-trust-and-how-does-it-work/

Brynsam

Hectors_House said:

I don’t know if this is the right place for my query but I hope someone can advise.

My partner has written his will to split his estate equally between his three children.

One is married and solvent, the other two are currently on benefits and he’s not sure they will work again.

He has set his will up to feed £10,000 per years to the two that are unemployed.

I was thinking this will impact their benefits.

The money purely cones from the assets their father will leave behind (his house and some savings), not from income derived from rental of his property when he is gone.

Im assuming this will have an impact on their entitlements.

Thanks.

Highly likely it would impact on their benefits, but it's interesting that you are asking, not their father. Maybe he would prefer to know his offspring aren't living off the taxpayer, at least for a couple of years? Stranger opinions have been known!

Given the amounts involved (a total of £40,000 if I understand correctly), setting up a discretionary trust and running it correctly could make quite a dent in that sort of sum - and what would the longer term plan be, depending on the age of those inheriting? If the money is drip fed over a longer period, to minimise the impact on benefits, the costs of the trust (and hassle of running it) will go on for a long time.

Manxman_in_exile

None of my business, but you don't feature in your partner's will?  I assume that's intentional?

(As I say none of my business, but you understand this... )

Hectors_House

Manxman_in_exile said:

None of my business, but you don't feature in your partner's will?  I assume that's intentional?

(As I say none of my business, but you understand this... )

Yes Manxman in Exile I don’t feature in my partner’s will and this isn’t a problem.

My only concern is, now he has discussed it with me I can see two of his children may, inadvertently be affected by his generosity in ways he didn’t intend (one son is fighting cancer and was long-term disabled before his diagnosis and will never work again sadly).

It is looking like all three will inherit in the region of £120,000 each and he, currently has things set up to drip feed £10,000 per year to the two sons reliant on various benefits currently.

Thank you everyone for your advise so far.

AnotherJoe

Who does he envisage will be running this substantial fund that will be making these payments? Will there be conditions put upon the trustees to make note of the beneficiaries financial circumstances with regard to benefits when paying them?

Is the sum of £10k a priority/sacrosanct or if it looks as if the money will run out sooner than expected can the trustees low the amount? If benefits law changes can the sums be altered / the trustees take this into account ?

This could be complex to set up and manage (aka costly) if passed to a company.

Keep_pedalling

Hectors_House said:

Manxman_in_exile said:

None of my business, but you don't feature in your partner's will?  I assume that's intentional?

(As I say none of my business, but you understand this... )

Yes Manxman in Exile I don’t feature in my partner’s will and this isn’t a problem.

My only concern is, now he has discussed it with me I can see two of his children may, inadvertently be affected by his generosity in ways he didn’t intend (one son is fighting cancer and was long-term disabled before his diagnosis and will never work again sadly).

It is looking like all three will inherit in the region of £120,000 each and he, currently has things set up to drip feed £10,000 per year to the two sons reliant on various benefits currently.

Thank you everyone for your advise so far.

I really think it is a silly idea. £120k is going to make a big difference to their lives even if it does mean loosing benefits, which may not even be the case with the one who can’t work because of illness, as his benefits may not be means tested, but even if they are drip feeding at £10k pa  will Have the same effect on those benefits.

There is also the strong possibility that this son may not live long enough to make full use of the £120k.

He should keep it simple, just leave them equal shares outright.

Aranyani

If the sons receive a lump sum, then it is my understanding that if they used it for a sensible reason, such as to buy a home or to make adjustments to make their home more disability friendly, or buy an adapted car or pay for specialised care or therapy etc. Then this would not be counted as deprivation of assets and would not affect their benefits. 

I agree with Keep Pedalling that if the sons are intelligent adults capable of making their own decisions, he should just leave them their equal share and trust them to make the right choices for themselves at that point in their lives.

AnotherJoe

Keep_pedalling said:

Hectors_House said:

Manxman_in_exile said:

None of my business, but you don't feature in your partner's will?  I assume that's intentional?

(As I say none of my business, but you understand this... )

Yes Manxman in Exile I don’t feature in my partner’s will and this isn’t a problem.

My only concern is, now he has discussed it with me I can see two of his children may, inadvertently be affected by his generosity in ways he didn’t intend (one son is fighting cancer and was long-term disabled before his diagnosis and will never work again sadly).

It is looking like all three will inherit in the region of £120,000 each and he, currently has things set up to drip feed £10,000 per year to the two sons reliant on various benefits currently.

Thank you everyone for your advise so far.

I really think it is a silly idea. £120k is going to make a big difference to their lives even if it does mean loosing benefits, which may not even be the case with the one who can’t work because of illness, as his benefits may not be means tested, but even if they are drip feeding at £10k pa  will Have the same effect on those benefits.

There is also the strong possibility that this son may not live long enough to make full use of the £120k.

He should keep it simple, just leave them equal shares outright.

Not necessarily. It's probably to avoid Going over a threshold of savings where benefits are reduced. However making that future proof could be difficult.