I have come across this forum by chance and I am really hoping to find some advice on helping me with my current situation.
My mother passed away in April this year and left her estate split between myself and my Brother. My share of the estate has been placed in a discretionary trust and this has been confirmed via a “letter of wishes” that was included in the will.
Now I am at the puzzled stage because I will obviously need a bank account to place the funds when all the monies have been gathered.
I believe Canter Allen and Barclays offer “trust” accounts but I read that I will also need to register the trust with hmrc for possible tax purposes ?
Having spent several days searching the internet I am not really progressing and am at a loss on what I really need to do.
There is a lot more to running a trust than opening a bank account (in fact you may not need a bank account – they are administratively costly and sometimes not needed if say a stockbroker can do the cash management along with managing the investments) and registering it.
The trust would have been set out in the Will. The separate letter of wishes may have set out what your mother’s wishes were for the trust, but they are not binding. You don’t say who the trustees are but they have a duty to look after the trust properly (in trust terms).
As I said above, you/the Trustees need to take professional advice.
Hello Freddo, can you please clarify why ‘your’ part of the inheritance is to be placed in Trust and does that not apply to your brother? Is this possibly that there is an age restriction, or that your father is still alive?
Sometimes Wills can be confusing and although there is a mention of estates to be held in Trust for distribution. it may not actually be necessary to arrange this. Some clarification from you as to the wording of the Will would be helpful, but as said already, a good STEP solicitor could soon clarify this if you need it.
Firstly can I thank you both for taking the time to offer me advice I really do appreciate it.
The reason why my part of the inheritance is being put into a Discrectionary trust is because I am disabled and in receipt of various benefits.
These are a couple of quotes from my Mother’s will that might help perhaps ?
" It is my wish that my son should be regarded as the primary beneficary as regards both the capital and income of the fund and you should provide him with sufficent income and capital to enable him to live in full comfort for the rest of his life"
" I have placed his residuary entitlement within a trust to ensure this does not affect his current way of life"
Thank you for coming back to us to explain the reason for your mother establishing the discretionary trust for you. There are certain rules which can be helpful (providing the necessary criteria are met) in reducing the tax liabilities of trusts for disabled people so again, it is important that you get the correct advice. Trusts are a specialist area and to be honest I find that lay people who try and manage them themselves often get in a mess and have to pay even more professional fees, tax interest and penalties to sort things out than if they had taken professional advice in the first place.
I suggest you pass our comments/ suggestions on to the trustees (even if you are a trustee I would expect there to be at least one other and if not then it would probably be wise to appoint another), and find a local STEP member who can help you set everything up so that the trust can hopefully run smoothly in the years to come.
I will definitely take on board your thoughts and advice here. I don’t think we realised how tricky the setup and running of the trust might be. We are approaching a time now when we need the trust to be ready to take its part of the estate and it has become apparent that this is no simple task for your average person. I want to make sure everything is done correctly so there are no comebacks in the future. The thought of managing everything yourself to save costs sounds attractive but not if you face a bigger payout later on due to errors you might have made!
Freddo, it sounds as if the purpose of using the discretionary trust is to keep the trust fund out of any financial assessment related to means-tested benefits. So, please also bear in mind that if you are the sole trustee then you are in sole control of the trust and payments to yourself. In such circumstances, it is probable that you could lose means-tested benefits. Therefore, it is essential that a second trustee is appointed to try and negate that probability. Ideally, there should be 2 trustees, neither of whom should be you.
Graeme Lindop Probate Consultant Coles Miller Solicitors LLP
Well it has been a longtime since I posted here due to things taking quite awhile to resolve themselves but I have now got my trust registered with HMRC and also managed to open an account with the Metro Bank.
Now that these two crucial events have happened it has made me wonder about the do’s and dont’s of running a trust account.
As stated earlier in the post I am in receipt of benefits and this is the reason why the Trust was required.
Could anybody advise me on the following points ?
1 - Can a Trust make investments that will make financial gains and allow to funds to last longer ?
2 - Are there any specific items etc on what the Trust funds can be spent on ? I have read that you should never have direct access to the cash and transfer to your own private bank etc.
3 - Do I need to notify the DWP of a change in circumstances? I am thinking I don’t due to me not actually having guaranteed access to the money that is held in the trust?
4 - What happens to any funds left in the trust when I die? Would they be part of my will?
I would suggest that you take appropriate professional advice on your questions. No one can give proper advice without seeing the trust document etc. And this is not a forum for free advice for lay people. Your local Citizens Advice may be able to help you or point you in the right direction.
