Advice needed on creating a trust in will

MutleysMother

Could anyone advise me on what kind of trust I need for my will?

I want to leave everything I have to my only child at the age of 25. If I die before they reach that age, how do I ensure that their other financially irresponsible parent isn't able to coerce them into handing over any money from my estate?

I know this sounds harsh but it took me years to get back on my feet after we separated.

RAS

Are you divorced or still separated?

MutleysMother

We were never married. It was a very abusive relationship.

RAS

So at least there is no risk he'd be able to claim. 

Trusts that limit access are very difficult and expensive to administer. It might help folks here if you can give a clue to the possible value?

MutleysMother

It'll be just under the Inheritance Tax threshold. unless of course, I decide to adopt a more champagne lifestyle!

poseidon1

As the parent, you can indeed  establish something called an 18 to 25 Trust under the terms of your will. Such a trust gives trustees discretion to determine when children can receive assets and or income within the age range, until automatic entitlement at age 25.

Key points to note:

* An appropriately qualified lawyer expert in these trusts should be consulted to advise. It is a sad fact that competency in the complexities of Trusts is not widespread so recourse should be made to the directory of the Society of Estate and Trust Practitioners ( STEP) to find a firm local to you.

* Choice of trustees - the executors of your Will, are the usual candidates for this role, so they need to be willing to take on the obligation and have the abilty to comprehend ( if not fully understand) the administrative and tax complexities such a trust requires. They can always retain the trust  solicitor or a STEP accountancy firm to assist them when the time comes so need to be comfortable working with such professionals.

* Tax can be impactful on these trusts, especially income tax at the rate of 45%. However, life insurance company Investment Bonds can be excellent  vehicles to avoid this tax rate during the currency of the trust and its eventual termination. They are also useful in avoiding complex administration since they neither produce taxable income or chargeable gains thereby potentially  avoiding the preparation of annual trust accounts and associated annual tax returns. An appropriate IFA can advise trustees in this area, but it might be useful to acquaint yourself of this option.

* The 18 to 25 trust can provide  excellent robust protection of your daughter's legacy until age 25, but of course ends at that age so does not prevent the other parent exerting undue influence thereafter to benefit from your child's largesse.  There is another form of trust that can provide more permanent long term protection ie a discretionary trust. However cost and tax  implications and the long term burden placed on family/friend trustees maybe unappealing especially since as non professionals they cannot be remunerated.

Hope the above gives you a bit of a road map when discussing the matter with a suitable lawyer. However despite the general objection against trusts held by many forum contributors, the circumstance you describe is precisely the kind of situation an appropriate trust can address and you are to be applauded in seeking to protect your child from a potentially predatory parent, after your death.

MutleysMother

Poseidon1, thank you so much for taking the time to leave such a detailed response; I'm so grateful. Your kindness brought tears to my eyes, thank you.

I know now how to find the information that I need.

RAS

Mutleysmother

The other thing you need to look at carefully is with whom and where your child would live if you die before they are 18 years old?

If they are an older teen the chances are that a court would agree with their chosen family, but it can be harder to prevent the other parent achieving custody of younger children. From personal experience, keeping mum healthy was a major issue when I grew up as the other option was dire. 

There's also was a thread here in which the long-term partner of a woman with a son discussed options if anything happened to her, prompted by the son's anxiety about his future. Maybe a useful read to think about it from the child's perspective.

poseidon1

MutleysMother said:

Poseidon1, thank you so much for taking the time to leave such a detailed response; I'm so grateful. Your kindness brought tears to my eyes, thank you.

I know now how to find the information that I need.

Happy to have been able to assist.

Regardless of the inherent complexities of trusts, your circumstance is a prime example of how useful they can be to protect the vulnerable.

The point made by RAS of the possibility of your estranged partner obtaining guardianship of your child in the event of you dying whilst she is a minor, reinforces the need for separate trustees to protect her inherited capital during her minority and beyond.

MutleysMother

Following up on my question regarding setting up a trust. I've spoken to a couple of solicitors ( apparently experienced with trusts)  and have come away feeling that I could be leaving a bigger and more expensive mess for my soon-to-be 18-year-old. 

It was explained that monies left in a trust would be invested on behalf of my child until they are 25. The problems I see with this are:

1) I can't get any quote/idea of how much the solicitors would charge.
2) It relies on the competency or otherwise of said solicitor.

In all honesty, I haven't come away from either meeting feeling reassured.

Would it be possible to liquidate any assets and place the funds in an NS&I account until my child's 25th birthday?

Has anyone had experience with this kind of situation?

Any advice would be very welcome. Thank you.

SiliconChip

Why do you need to wait until your child is 25? Given that they are about to be 18 it would be much simpler to simply delay making the will until their birthday has happened and leave them whatever you want to without any restrictions.