Money left in a trust in my will

mills112

https://forums.moneysavingexpert.com/discussion/comment/82162754#Comment_82162754

the fact that this will is an "emergency will" so it is unlikely to be used to set up the trust, i didn't really want to spend too much money on it and it is already quite expensive! i don't want to pay loads more to get a STEP solicitor, as ideally, i would consult someone who is a trust specialist first before setting up the will but all this cost money for something that is unlikely to happen.

i think it will not be a straightforward process for the Trustees to apply for the disabled person's trust as my brother has no automatic entitlement so capacity assessments will be needed at the time to convince HMRC that he qualifies. i am therefore more concerned about the money being allocated to him.

yes, i did think i should just trust my husband to look after my brother but he may not do so, therefore at least this way the money is sidelined.

i did think it would cost a lot of money and efforts for a trust to be set up but there are advantages to a disabled person's trust in terms of tax. when i get older and nearer to the possibility of kicking the bucket and my brother is still around, i may consider setting up the trust even before i kick the bucket. at which time i would need to instruct a specialist to set up the trust.

mills112

https://forums.moneysavingexpert.com/discussion/comment/82162662#Comment_82162662

the wording is too long! it is a full page! but it does look to have covered all the aspects of a discretionary trust. i do think these solicitors are familiar with these sort of trusts in a will, not specifically a disabled person's trust but certainly trusts. i just want to make sure that the Trustees will have the power to set up a disabled person's trust from the will so i will check this point with the solicitors.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82162799#Comment_82162799

It's actually reassuring that the trust clause itself is 1 page long, since it does suggest a arrangement with the necessary bells and whistles to do the job.

I note that this Will is by of a 'place holder' for the time being, and you may give further consideration to creating a trust during your lifetime for your brother in the future.

If you decide to do so, as a trustee/settlor you will come to appreciate the challenges trustees face in getting these arrangements off the ground by way of banking, investment, accounting and tax compliance services. Those called upon to take on the role will have little or no appreciation of what it entails.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82162754#Comment_82162754

I have to agree with the statement that formal trusts can be complicated and expensive to administer with discretionary trusts topping the league table in cost and complexity.

With regard to formal trust provision for the disabled, its difficult to see a trusted friend/ relative as a reasonable alternative , partly for the reasons you state.

In addition to the aspects you outline there is the issue that the trusted friend will be personally taxed on the funds entrusted into their custody ( assuming they don't just leave it all on non interest bearing account).

As far as the world at large is concerned it is their own money so susceptible to attack on divorce/ bankruptcy.

Should they themselves become incapacitated, their own attorney ( if they have one ) would have no authority or power to divert monies in favour of a beneficiary of what in effect would be a secret trust.

Finally on death, short of creating a disabled trust on behalf of the person they assumed responsibility for, how do they ensure continuity of their custodianship on a similar basis, not to mention who should bear the burden of IHT if the monies forming the 'secret trust' pushes the friend's estate into IHT terrority?

Yes, trusts in this modern world of diminishing specialist services are not a perfect solution, and a minefield for the uninitiated trustee, but the alternative you suggest does not really hit the mark in ensuring reliable and uncomplicated provision for a disabled beneficiary. Intermingling funds set aside for a disabled person with those of his/her custodian seems less than ideal.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82162925#Comment_82162925

Thanks for your comments.

mills112

https://forums.moneysavingexpert.com/discussion/comment/82162901#Comment_82162901

yeah, the will does look to be well prepared and the fact that it talks in length about the trust does mean that the solicitors do have knowledge, otherwise it would be a brief reference. i don't think the solicitors would agree to do the will if they didn't have knowledge of the trust. actually it is two pages as the will talk about the trust for a page and then the commentary gives advice on it for another page!

i think it is going to be difficult to get the trust to work in practice without costs as most likely the trustees will need to seek advice from professionals and employ them to help administer the trust. so i am hoping that it will actually never be needed, so this is just an emergency measure.

Marcon

they can't really state that my brother is a disabled person in the trust as my brother would need to apply for qualification and that isn't automatic from what i have read because he is not in receipt of the relevant benefits.

There's some very helpful and clear reading here which might give you some useful additional information: https://www.litrg.org.uk/tax-nic/trusts-and-estates/trusts-disabled-people