IPDI or Discretionary Trust- Opinions Appreciated

Trusts Discussion
1

Good Afternoon All,

I would be interested for some opinions on a trust which has been included in a Will where I am assisting in the estate administration.

The Will leaves a share of the estate to a named beneficiary (the deceased’s son “N”) on the terms of a trust declared later in the Will.

The trustees of the trust shall, at their discretion, invest the trust fund in their joint names with power to vary such investments from time to time and to stand possessed thereof upon trust to apply the income and all such part or parts of the capital at such time or times and in such ammer to or for the benefit of N during his life but with a request that the Trustees in exercising their discretion have special regard to the needs of N.

There is then separately explicit discretion in relation to capital advances from the trust during N’s lifetime.

N is a vulnerable adult in receipt of a variety of means tested benefits.

I have read the trust as an IPDI, although there appears to have been an intention to provide some discretion in relation to the payment of income (although I am not sure this has been successful). The concern now from the family is that this will impact his access to benefits, which was not the testator’s intention.

I would be grateful for any thoughts on this. I have tried to include the wording of the trust as faithfully as possible as I appreciate this is a question of construction.

2

Just wonder if there is any indication on the will as to the precedent used by the person who drafted it as the commentary in the text book may be helpful.

3

Perhaps look at a deed of variation into a Vulnerable Beneficiairies Trust?

4

No indication as to the precedent used. It was drafted by a firm of solicitors and incorporates the STEP Standard Provisions 2nd Edition but I suspect the precedent is from the firm’s precedent bank or simply cobbled together.

Unfortunately, a vulnerable persons trusts would not be appropriate as N is not in receipt of qualifying benefits. In either case, I am concerned that a variation of any form by him will be treated as a deliberate deprivation as he is already in receipt of benefits.

5

As the will was drafted by solicitors, I suggest you ask them for a copy of their instructions as the terms of the will appear unclear.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

6

Is there a trust or power to accumulate surplus income?

Simon Northcott