How to structure a Trust 6 December 2022 at 11:37AM in Savings & investments 5 replies 198 views

Mrs_pbradley936

I am looking for help/info about how to structure a trust. My husband and I have mirror wills and when we die everything passes to the surviving spouse. Upon the death of that person everything goes into a trust and is shared between our sons and we will have the solicitor as a joint Executor alongside our sensible son.

We have two sons one is sensible and the other earns £1 and spends £5 - we were hoping that as he got older he would develop a bit more sense but it is not happening. We need to protect him from himself or else his children (our grandchildren) will have nothing going forward. My son is 53 so nothing I have seen online can offer any suggestions as to what to do to stop him ploughing through his legacy. Once a person is an adult they can do as they please as it should be.

My other son I have no worries with - they were given the same as in deposits for first home purchase and 20 odd years later one son is doing fine.  The other does not own his own home because he sold it and spent the equity, run up credit cards and at one time had an IVA.

What can I do if anything to stop him getting a large sum and simply spending it on nonsense?

xylophone

If you wish to set up a Trust, you should take advice from a solicitor expert in Wills and  Trusts - it may be that your current solicitor or a partner in his practice has this expertise.

https://www.step.org/about-step/public

A Trust needs administration and probably registration and the taxation regime needs to be understood and followed.

https://www.gov.uk/trusts-taxes/registering-a-trust

And if IHT is a consideration, be very careful to acquaint yourself with the "family home" regulations as they relate to Trusts.

https://techzone.abrdn.com/public/iht-est-plan/residence-nil-rate-band-guide

dunstonh

Upon the death of that person everything goes into a trust and is shared between our sons and we will have the solicitor as a joint Executor alongside our sensible son.

Be on guard.   A lot of solicitors do not actually see the solicitor do the estate work.  Often they farm it out to sub company using non-legal staff but charge very high amounts for doing it.    Sometimes the sub company is the spouse or family members of the solicitor.

Often its better to not nominate the solicitor but leave it so your sons can choose a solicitor of their choice.

What can I do if anything to stop him getting a large sum and simply spending it on nonsense?

Trusts involve a lot of work, have tax issues and reporting to HMRC.  Most of which is carried out by the trustees.   If you appoint professional trustees, it is very expensive.    For example, I have to produce an annual report on the investments/adjustments for a trust where a solicitor is a trustee.  I make the appropriate charges for doing all the work and send it to the solicitor.   The solicitor then charges three times what we do for reading that report.  Not once has the solicitor ever queried it.   It is only because they are a trustee.

Trusts should not be entered into lightly and have consequences.  Professional advice should be sought.

IanManc

If you are worried about there being nothing for the grandchildren why not leave the money directly to them on the death of the second spouse, missing out your spendthrift son? He won't like it but you'll both be dead so what he thinks about it won't bother you.

Really trusts should only be used where they can't be avoided. You don't need to use one.

Also, there is no need for anyone to have a solicitor as an executor unless they literally have no one at all to do the job among their family or the beneficiaries. That is not the situation you are in. The only time I think it is appropriate is where the sole beneficiary is, for example, a child; or a disabled adult offspring who lacks mental capacity and the money is going into a trust; or where the whole estate is going to charities and someone needs to administer the will.

Albermarle

Also, there is no need for anyone to have a solicitor as an executor unless they literally have no one at all to do the job among their family or the beneficiaries. That is not the situation you are in. The only time I think it is appropriate is where the sole beneficiary is, for example, a child; or a disabled adult offspring who lacks mental capacity and the money is going into a trust; or where the whole estate is going to charities and someone needs to administer the will.

Sorry to ( briefly ) hijack the thread. 

If some/all of the money from a will is going into a trust for an adult that lacks mental capacity, then I presume a solicitor is needed to set the trust up?. However not sure why it would be beneficial to also have a solicitor as an executor, if there was a family member capable of doing it?

IanManc

 I don't think an amateur should ever try to set up a trust. Trust law is a minefield and it is best left to experts.

To be clear, if there's anyone trustworthy to be an executor it is better for them to be asked to do it rather than paying a solicitor to do it. An executor can always ask for advice from a solicitor or instruct them to do specific tasks if they need help, but the solicitor doesn't need to be an executor to do that.

Having a solicitor as an executor should occur only when it is a necessity, not as a matter of course. If a solicitor or will drafting company suggest acting as executors in any other circumstances the offer should be politely declined.

Similarly, and now definitely off topic (!) if a firm of solicitors is holding a will there's no need to instruct them in any aspect of the estate when someone dies. Holding a will doesn't oblige executors etc to use that firm for anything. 

Having seen solicitors' offices turned upside down to look for wills that have been held "for safekeeping" I'd never leave mine in a solicitor's office. They only keep them in filing cabinets. Offices close, firms merge, and it can be a nightmare to find them. Mine is at home in a fireproof box and my beneficiaries know where it is.