Co executor of trust

gag_reflex · 22 October 2019 at 2:52AM

Hi, hoping someone can help me with this... I did do a word search across the forum for applicable terms and got no comparable scenarios so just going to ask and hope.

My mother died a few years ago and left a tidy little sum in a trust for my two sons for when they reach 21 which even for the eldest is still 8 years away.
My sister and my aunt were named as co-executors of the trust which I had no problem with as aunt actually financially astute and fund is growing nicely.
My question though is actually regarding sister's useless oik of a husband...
Sister sadly suffering poor health, to the point where we might be talking months not years and I need to know if she should die and whether intestate or not, could aforementioned oik claim, or be willed any rights to assume role of co-executor?
Aunt would obviously still be co-executor worst case but I'd rather know categorically whether she could or would just continue as sole executor and rule him out of any access to the trust?

Thanks in advance for any help or guidance on this, I may yet end up lining some lawyers pocket I guess but prefer to avoid should someone have any insight.

getmore4less · 22 October 2019 at 6:11AM

Check the terms of the trust on how new trustees get appointed.

If nothing specific then then there are default rules.
(AIUI the remaining trustee gets to appoint)

The trust will need to have more than one trustee.
If the trustees have the power then it may be a good time to appoint another trustee

Probably the sensible thing to do is for sis to retire as trustee* and someone else become second trustee, yourself and your hubby may be most appropriate.

Presumably aunt is also a bit older so it might be a good time for you to get involved and understand the trust/investments and tax reporting just in case you have to take over.

* probably not a high priority for sis but if she is also concerned it could be a prudent move to remove any doubt on the situation.

This gives a decent overview(read other sources as well)
https://www.clarkewillmott.com/wp-content/uploads/2017/07/Trustees-retirement-and-removal-factsheet.pdf

NOTE 1: the death of both trustees could leave the oik with the power to appoint new trustees if the aunt were to pass first.

NOTE 2: Although not relevant to your question you will probably get told the kids can access the trust at 18, this can apply in some circumstances depending on the trust.

Keep_pedalling · 22 October 2019 at 9:00AM

Just because your sister and aunt were the executors of your mother’s will did not mean they would automatically become the trustees of your children’s inheritance, and it sounds like you should take over your sisters role without any delay.

I think you should actually take legal advice on how to proceed with the trust, not just on how to appoint new trustees, but also on the clause about your children reaching 21. Just because the will states that they should not receive it until that age does not mean that term is enforceable. If the inheritance is held in a bare trust then they are entitle to the money at 18 (16 in Scotland).

You also seem to be suggesting that your sister has no will, that is something else that needs dealing with as a matter of urgency.

xylophone · 22 October 2019 at 4:33PM

My mother died a few years ago and left a tidy little sum in a trust for my two sons for when they reach 21 which even for the eldest is still 8 years away.

If this is a bare trust (the money has "indefeasibly vested" in your sons, then they have the right to call for access and control at age 18 (16 in Scotland).

http://www.prescient-financial.com/docs/Bare%20trust%20returns.pdf

https://www.gov.uk/trusts-taxes/types-of-trust

As your sister is so ill, see the links above about her resigning and appointing a new Trustee.

gag_reflex · 23 October 2019 at 1:03AM

Thank you all for replies..

The decision to have the trust pay at 21 was actually agreed by myself and late mother in the hope that both boys would be in uni or at least partly grown out of the 'what's this beer stuff, wahey' phase before discovering they're each suddenly £40k richer at 18 and deciding not to go to uni at all. Neither know about the trust and I'm not about to let on - we know our boys only too well. It's not a life changing fortune but they'll both get a good leg up that's for sure.

As to what type of trust, I'm guessing it's a bare trust but prudent for now to wait for prognosis on sister before hassling aunt: a lot of this is still in the 'what if' stage and ideally sister recovers for long enough to see boys get the cash. We're getting clued up ready mostly.

I was already aware of ramifications of aunt dying first but luckily she's in good health and it's more likely we'll have sorted a new trustee in place of sister by then and be old pro's at it.

Sis I am sure has a will which likely looks after her own children first but remainder of her 'estate' will pass lock stock to oik and I didn't want him rolling up claiming to be new executor purely as next of kin but unless aunt does die first this scenario is massively unlikely.

Thanks once again, some very helpful info on links and much happier now

xylophone · 23 October 2019 at 12:49PM

Neither know about the trust and I'm not about to let on -

If it is a bare trust, there is a problem here.

Presumably the money is on deposit or invested. The income from a bare trust is taxable on the beneficiary (unless the assets within it have been provided by a parent to his/her minor unmarried children and the income is greater than £100 a year).

In the case of children (unless they have income from other sources) this is unlikely to cause any issue.

However, if your sons were working at age 18 then it might.

https://www.taxinsider.co.uk/763-The_Bare_Essentials_Bare_Trusts.html

getmore4less · 23 October 2019 at 1:59PM

What did the will say that determines the type of trust.

What legal advice was taken in writing the will.

getmore4less · 23 October 2019 at 2:02PM

Keep_pedalling wrote: »

Just because your sister and aunt were the executors of your mother’s will did not mean they would automatically become the trustees of your children’s inheritance, and it sounds like you should take over your sisters role without any delay.

Executors are the default trustees of any will trust that does not set alternatives.

getmore4less · 23 October 2019 at 2:11PM

Bereaved minor's trusts get special tax status.
Also in many case they A&M trusts not bare.

Malthusian · 23 October 2019 at 4:57PM

xylophone wrote: »

If it is a bare trust, there is a problem here.

Presumably the money is on deposit or invested. The income from a bare trust is taxable on the beneficiary (unless the assets within it have been provided by a parent to his/her minor unmarried children and the income is greater than £100 a year).

In the case of children (unless they have income from other sources) this is unlikely to cause any issue.

However, if your sons were working at age 18 then it might.

If of course the "tidy sum" plus any other interest / dividend income the children have exceeds their savings / dividend allowances. If it's only £40k each that may well not be the case.

Notwithstanding that "conceal their money from them and hope you get away with it" is never good advice.

We also don't actually know that it is a pair of bare trusts; it may be a discretionary trust.

The decision to have the trust pay at 21 was actually agreed by myself and late mother in the hope that both boys would be in uni or at least partly grown out of the 'what's this beer stuff, wahey' phase before discovering they're each suddenly £40k richer at 18 and deciding not to go to uni at all.

21 was probably when I was at peak irresponsibility. By then I had moved out of the "what's this beer stuff" phase and into the "I like beer and weed far too much" phase. At 18 I was still under my parents' shadow. (As it happens I didn't blow any of my savings either at 18 or 21; beer and weed is cheap.)

They should be involved in the discussions about how their money is invested and what they want to do with it as soon as they are old enough to grasp the time value of money (i.e. around age 12, possibly earlier) and can be bothered to take an interest (which may be never depending on the child). Being responsible with money is the same as any skill, it takes hands-on practice.

Co executor of trust

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