Deed of Variation to set up a Bereaved Minors Trust

ammee

Hi, i was wondering if anybody could help me. My husband passed away very suddenly nearly 2 years ago leaving some assets to my children and me. He was young but had a will that set up a discretionary trust. However, i understand that a Bereaved Minors Trust would be a better outcome for the children in terms of tax advantages and also while it has no income i don't have to register it, unlike a discretionary trust which does need to be registered. Can anyone direct me to drafting a deed of variation in order to add all the children's inheritance into a Bereaved minors trust? They will receive the same inheritance amount,  i just want it to be held in a bereaved minors trust. I know I've left this very late and only have 1 month to sort this out now, I only have myself to blame for dragging my feet.

Savvy_Sue

I'm no expert, but this may not be possible, because there are minors involved - I say MAY, because if the change was going to disadvantage them in any way, you certainly can't, because they can't agree to it. 

Was the will written by a solicitor? If it was, it may be worth asking them for advice, and possibly an explanation of why the Trust was set up as Discretionary rather than Bereaved Minors? And you may need advice from a STEP solicitor, because they specialise in this kind of thing. https://www.step.org/about-step/public

Good luck, you are going to have to stress how time sensitive this is as you make contact with solicitors. 

Keep_pedalling

It is not possible for minors to make a deed of variation, however depending on the terms of the trust the trustees may be able to wind the trust up and create a new one. You are going to need professional advice.

You say it earns no income, what assets has he put in trust? 

poseidon1

Problem with a deed of variation in these circumstances is that your children ( if under 18) lack legal capacity to vary their interests in the discretionary trust.

You do not have power ( as their  surviving parent) to do this on their behalf without application to the equity courts where a judge in chambers can sanction a variation of the will to redirect the children's beneficial interests into a more tax favourable form of trust.  In any  event this is an expensive option since likely requires a barrister to settle the relevant pleadings.

However are you certain the trust is fully Discretionary?  It would be most unusual to tie up what your husband left to you in this way,  especially since a testamentary gift of his assets into such a trust could not use the spousal exemption to shelter from IHT and would squander the residence nil rate band  leaving only premature utilisation of his £325k nil rate band ,assuming the matrimonial home was part of the trust assets. I find it difficult to imagine a professionally drafted Will trust would allow such a potentially calamitous tax outcome.

Please elaborate on exactly what was gifted into trust and provide the exact trust wording in case you have misinterpreted what has occurred  here.