Advice about Discretionary Trust Please

sofa_bean

My father-in-law died in January. My husband is executor (with his step-sister also named as executor with power reserved) and has been granted probate.

According to the terms of the will the estate is to be split between my husband (50%) and his step-sister and step-brother (25% each) however due to his step-brother's long-term mental health condition his share is to be in the form of a Discretionary Disabled Persons Trust, with my husband and his step-sister as trustees.

As we have never had to deal with anything like this before could anyone please advise how he should go about setting up the trust? We assume that a solicitor would be his first port of call? 

Any hints, tips or advice would be gratefully received.

Newly_retired

My sister benefits from such a trust. Capital is invested and she has access ( or rather, her daughter does, who has PoA) to a specific sum each year. It was set up by the solicitor who handled probate, through a financial advisor. Hope this helps.

HobgoblinBT

We went through exactly the same thing about 10 years ago following the death of my mother in law.  A trust was set up as part of the will.  The instrument that created the trust was the will, with my mentally handicapped brother in law being the life time beneficiary and upon his death, any remainder going to anyone who has been involved in his care, subject to the discretion of the trustees.  The trust has been able to open bank accounts and an investment account to hold “investment funds” with Hargreaves Lansdown, but not individual stocks and shares.  The trust also owns a house, purchased within the trust for him to live in with support, although that didn’t work out for him.  It is now let out and the rental income, after costs, goes to the trust to benefit him.

A 2nd trust was set up through a will of my brother in law’s late godfather under STEP terms.  These are standard terms that can be googled, and set standard terms for many trusts.

My advice is to examine the will and get several full copies certified by the solicitor prior to submitting for probate, and get several stamped copies of probate, so that at least one can be used to set up a bank account if appropriate.

The HM gov HMRC web site has a very good section on trusts which I recommend that the executors/trustees study.  I did the probate myself but if the executors are not confident they should consult a solicitor or probate specialist.  

The trust will need to be registered with HMRC within something like 12 months? of probate being granted, and annual tax returns submitted thereafter.  Trusts to benefit persons with mental incapacity are exempt from tax, and the trust income is treated as that of the beneficiary.  The tax return can be in paper format, and HMRC website does not have their own online trust tax return and directs you to private suppliers.  I have found “taxfiler” easy to use with the 2020/21 fee being £44.  

We hold the income for my brother in law and use it for larger expenditure such as redecoration of his accommodation, furniture and holidays.  

Hope that helps.

xylophone

Read

https://www.gov.uk/trusts-taxes/trusts-for-vulnerable-people#:~:text=A vulnerable beneficiary is either,do not receive them):&text=Disability Living Allowance (either the,component at the higher rate)

The will  itself states that your stepbrother in law's share is to be held in Trust for him and his sister and your husband are to be Trustees? 


They should open a bank current account for the Trust  in the name of the Trustees - your own bank may be happy to do this (you will need to make an appointment which should be much less stressful now that restrictions are easing).


You may wish to open both savings accounts and investment accounts in the name of the Trustees. 

Skipton is helpful with accounts for Trustees.


You could try Charles Stanley for a dealing account - Hargreaves Lansdown may reopen their Trustee
service once Covid restrictions are ended.

sofa_bean

Many thanks for replies all