Trust for disabled beneficiary

I am dealing with a small trust for a disabled beneficiary. Looking at the Will under which the trust was set up (many years ago) the relevant sections read as follows:

My Trustees shall hold the whole of my estate on trust either to retain or sell it and:

  1. to use the capital and income of the said estate for the benefit of my daughter…during her lifetime and after her death;
  2. to give the capital and income etc. to (MENCAP).

It then states that the trustees shall have the power to: (amongst other things)

  1. apply for the benefit of any beneficiary as my Trustees think fit the whole or any part of the income from that part of the estate to which he is entitled;
  2. apply for the benefit of any beneficiary as my Trustees think fit the whole or any part of the capital to which that beneficiary is entitled or may in future be entitled etc.

To date the daughter has been receiving all the income (as if a life interest trust only) but none of the capital has been used for her benefit. Should the trustees be considering the daughters need for capital also as directed by the first section of the Will. I cannot see that they are obliged to hold the capital for the charity if the daughter has an immediate need for capital.

sharon edelstyn
Phoenix Legal Group

If I wished to provide for a child or spouse but did not want to leave an absolute bequest for fear that they would spend the money as soon as they got their hands on it, I might set up a trust just like this. In that case I would hope that the whole of the capital and income would be spent on providing for that beneficiary over their lifetime. However, there would still need to be a residuary beneficiary, and the charity would fulfil that role.

If that were the situation here, it would have been the intention that capital should be spent as and when needed.

Clearly in this particular case the settlor is long since dead but there may have been some notes made at the time.

Failing that you comment that the child is disabled and the charity in question is MENCAP. Is there a mental disability? Clearly if there is, that would add to the case for making capital payments to a beneficiary who was mentally disabled as such expenditure would align directly with the charity’s own objectives.

Ian McKeever

Ian McKeever & Co Consulting Actuaries

1 Like

Have you tried contacting Mencap? They have for many years provided draft
will/trust clauses to parents etc, and obviously the advice has regularly
been updated. I suspect that your will may have been based on such a draft
based on their views at the time and, if so, they may be able to suggest
possible ways to deal with this now.

Kevin Mullen