Discretionary Will Trust rules Post - 2024

poseidon1

I believe given the modest size of the future trust fund, and the fact that the original trust was apparently concieved as a compliant S. 89 settlement ( before your intervention) then the most cost effective approach must be to avail yourself of Co -op's apparently generous offer to change it back for a nominal £100 fee.

Doesn’t sound cost effective to start again from scratch, if Co op had originally got it right 1st time around. However I am surprised that you (as a non lawyer or tax specialist) were able to convince them to change it in the first place and why ( as the experts) they did not talk you out of doing so.

STEP ( The Society of Trust and Estate Practitioners) is the acknowledged body for solicitors/barristers/ accountants and professional trustees possessed of the kind of advanced training in trust and estate matters, not possessed by ordinary private client practitioners.

In my experience the drafting skills of non Step lawyers in Wills and trust drafting matters can sometimes lead a lot to be desired. One would therefore hope that Co op have STEP qualified practitioners on their panel of lawyers especially where trusts are being incorporated in a Will.

Mumum

https://forums.moneysavingexpert.com/discussion/comment/82135213#Comment_82135213

Thank you, I didn't convince them, I only made an appointment to discuss the post-2024 changes, which they had been aware of and had advised the safest way forward to be the generic "descendants and charities" route. I'm now second guessing and wondering whether I had discussed this with an actual solicitor or Will writer.

I have requested a call-back to discuss speaking with a STEP solicitor, which Co-op apparently do have.

Thank you for giving up so much of your time.

HillStreetBlues

https://forums.moneysavingexpert.com/discussion/comment/82135222#Comment_82135222

What are the post 2024 changes? As not aware of either a change in the Regs or new case law concerning trusts.

Mumum

https://forums.moneysavingexpert.com/discussion/comment/82135296#Comment_82135296

The rules were tightened up to prevent abuse of the system and I am trying to find further information (which I had 2 yrs ago but can no longer find). A few links have been provided in helpful replies but, even when recently dated, aren't explicit enough when determining between a general Discretionary Trust or a Disabled one.

Mumum

It was indeed a solicitor I had spoken with at some point, who had the title of 'Estate Planning Team Leader'. I thought this useful for anyone else, at any time, having interest in this thread.

HillStreetBlues

https://forums.moneysavingexpert.com/discussion/comment/82135660#Comment_82135660

I would be surprised if the rules were tighten up as there would be more about it (updated Regs or new case law). What could have happened is the DWP decided to check trusts more thoroughly.

With a DT a person doesn't have a legal right to the money, if they did they could have what they want, when they want but this would have to be agreed with the trustees and they could refuse.

Payments form a DT are classed as voluntary payments and UC ignores those kind of payments.

There is case law on this subject [2020] UKUT 265 (AAC)

The regular payments received by the Appellant from the discretionary
family trusts established by her parents are voluntary payments which fall
to be disregarded under paragraph 16(1) of Schedule 8 to the Employment
and Support Allowance Regulations 2008 (the “ESA Regulations”),
Regulation 104 of the ESA Regulations and Section 4 of the Welfare Reform
Act 2007. The Respondent shall now re-assess the Appellant’s income and
capital and make any appropriate award of ESA(IR) on that basis.”

Although the case was ESA voluntary payments are also disregarded with UC.

I feel UC Regs 66.1.j confuses the issue as it states

income from a trust

There are many different trusts and some will count, but as judge Church ruled, if it's a DT then it's not classed as payment from a trust but a voluntary payment so UC Regs 66.1.j doesn't apply.

Mumum

https://forums.moneysavingexpert.com/discussion/comment/82136019#Comment_82136019

Thank you HillStreet, it may very well have been just a tightening up of regs with increased scrutiny, ie to stop those who saw fit to hide an inheritance by setting it up in a discretionary trust after receiving it. I do hope this will turn out to be the case. Will be speaking with a partner and head of wills, trusts and tax team end of this week so shall update this thread then.

Mumum

Updating to confirm that a disabled person's discretionary trust is still valid for the purpose of ring-fencing funds, however neither trust can provide 100% guaranteed protection.

With general discretionary trusts, trustees must pay 45% on the interest but can claim that back, albeit the hassle of extra administration.

This from a senior partner and head of wills & tax at a local STEP solicitors. Neither is more protective than the other but the disabled person's would be the most appropriate. I can get Co-op to redraft my original which they have on file, type it out again myself or get the solicitor to start from scratch (quote around the £500 mark).

There is a new clause (trustees can give 3% to anyone) which I would want updated to remove that permission, as future friends could take advantage.

I am mulling over what best to do.