Discretionary Trust set up by Will

MJD123

My father died at the end of 2022. He was a widower and owned a property in which he was living.

My brother and are executors of the will. The property and the rest of the estate, after a few bequests, fell into a discretionary trust set up by the will with my brother and I are named as trustees and beneficiaries.

My father’s aim at the time was to distribute the remainder of the estate in equal share between my brother and I while at the same time protecting the estate from any third party such as a creditor or divorcing spouse.

The terms of the will gave wide discretion as well as the ability to dismantle the trust and advance the monies etc to my brother and I.

We used the services of Dad’s solicitor in order to obtain grant of probate and although we seemed to do most of the leg work the bill was quite hefty. This also included a deed of Appointment to take an amount of money out of the trust which I understand was for tax efficiency purposes.

So we are now at a point where the grant of probate has been obtained and we are in the process of gathering together proceeds of bank accounts etc etc

The original reasons stated for the setting up of the discretionary trust no longer apply. We cannot seem to find out much, in simple terms, regarding the mechanics and costs of running a trust but I cannot help but feel it would be onerous and costly and we are of a mind to dismantle the trust and be done with it – although again we are not sure of any financial implications this may incur.

Of course Dad’s solicitors have offered to set up a meeting with their ‘Trust Team’ but we feel we have already been financially burnt by them – they are a large company – apart from that they are a distance away which will entail both my brother and I taking at least a day off work and travelling. I am thinking to seek some advice closer to home but am at a bit of a loss as to whether we need a solicitor, an accountant or a financial advisor.

Any advice?

bobster2

One thing that may help you make a decision - very few banks are offerring trustee banking services right now - and some will only open accounts if the amount involved is quite substantial.

Maybe Metro Bank or Skipton.

Keep_pedalling

Just distribute the assets between you and end the trust.

Marcon

MJD123 said:

My father died at the end of 2022. He was a widower and owned a property in which he was living.

My brother and are executors of the will. The property and the rest of the estate, after a few bequests, fell into a discretionary trust set up by the will with my brother and I are named as trustees and beneficiaries.

My father’s aim at the time was to distribute the remainder of the estate in equal share between my brother and I while at the same time protecting the estate from any third party such as a creditor or divorcing spouse.

The terms of the will gave wide discretion as well as the ability to dismantle the trust and advance the monies etc to my brother and I.

We used the services of Dad’s solicitor in order to obtain grant of probate and although we seemed to do most of the leg work the bill was quite hefty. This also included a deed of Appointment to take an amount of money out of the trust which I understand was for tax efficiency purposes.

So we are now at a point where the grant of probate has been obtained and we are in the process of gathering together proceeds of bank accounts etc etc

The original reasons stated for the setting up of the discretionary trust no longer apply. We cannot seem to find out much, in simple terms, regarding the mechanics and costs of running a trust but I cannot help but feel it would be onerous and costly and we are of a mind to dismantle the trust and be done with it – although again we are not sure of any financial implications this may incur.

Of course Dad’s solicitors have offered to set up a meeting with their ‘Trust Team’ but we feel we have already been financially burnt by them – they are a large company – apart from that they are a distance away which will entail both my brother and I taking at least a day off work and travelling. I am thinking to seek some advice closer to home but am at a bit of a loss as to whether we need a solicitor, an accountant or a financial advisor.

Any advice?

Yes. Find out some basic facts to ensure you aren't going to do something with nasty unforeseen consequences which could be largely or wholly avoided if you were better informed before you did something you can't unpick!

We live in a world of Zoom and Teams calls, so there is no need to take a day off work to go travelling to your dad's solicitors - nor do you need a whole 'team' to advise you.

If you and your brother agree what exactly you want to know (and from your post, the question 'What are the financial consequences of dismantling the trust in the immediate future and are there any tax or other advantages to not dismantling it immediately' is about the sum of it), you could always ask for an answer to that - and scrub any sort of further meeting if you've already made up your minds to go ahead with winding up the trust. Just ensure you understand the consequences.

There is one key element missing in your post: the value of the trust property. That could make a significant difference to the answer you'll get.

MJD123

Marcon said:

MJD123 said:

My father died at the end of 2022. He was a widower and owned a property in which he was living.

My brother and are executors of the will. The property and the rest of the estate, after a few bequests, fell into a discretionary trust set up by the will with my brother and I are named as trustees and beneficiaries.

My father’s aim at the time was to distribute the remainder of the estate in equal share between my brother and I while at the same time protecting the estate from any third party such as a creditor or divorcing spouse.

The terms of the will gave wide discretion as well as the ability to dismantle the trust and advance the monies etc to my brother and I.

We used the services of Dad’s solicitor in order to obtain grant of probate and although we seemed to do most of the leg work the bill was quite hefty. This also included a deed of Appointment to take an amount of money out of the trust which I understand was for tax efficiency purposes.

So we are now at a point where the grant of probate has been obtained and we are in the process of gathering together proceeds of bank accounts etc etc

The original reasons stated for the setting up of the discretionary trust no longer apply. We cannot seem to find out much, in simple terms, regarding the mechanics and costs of running a trust but I cannot help but feel it would be onerous and costly and we are of a mind to dismantle the trust and be done with it – although again we are not sure of any financial implications this may incur.

Of course Dad’s solicitors have offered to set up a meeting with their ‘Trust Team’ but we feel we have already been financially burnt by them – they are a large company – apart from that they are a distance away which will entail both my brother and I taking at least a day off work and travelling. I am thinking to seek some advice closer to home but am at a bit of a loss as to whether we need a solicitor, an accountant or a financial advisor.

Any advice?

Yes. Find out some basic facts to ensure you aren't going to do something with nasty unforeseen consequences which could be largely or wholly avoided if you were better informed before you did something you can't unpick!

We live in a world of Zoom and Teams calls, so there is no need to take a day off work to go travelling to your dad's solicitors - nor do you need a whole 'team' to advise you.

If you and your brother agree what exactly you want to know (and from your post, the question 'What are the financial consequences of dismantling the trust in the immediate future and are there any tax or other advantages to not dismantling it immediately' is about the sum of it), you could always ask for an answer to that - and scrub any sort of further meeting if you've already made up your minds to go ahead with winding up the trust. Just ensure you understand the consequences.

There is one key element missing in your post: the value of the trust property. That could make a significant difference to the answer you'll get.

The value of the trust property is in the region of £500,000 so in these days of high property prices not really the biggest trust in the world