Vulnerable Person

Trusts Discussion
1

I have been asked for advise with regards to a minor with autism. The Mother tells me She wishes to leave her estate to the 3 children equally ( over 18). I am then told one of the children has autism and would not be able to deal with money himself. She then asks for the sons share to be given to the eldest daughter and she will give his share to him as and when. A red flag has appeared and I have advised it would be in her sons best interest to look at a discretionary trust/ disabled persons trust ( obviously if he meets the criteria) . I am trying to point out the risks to her ( in layman’s terms) if she leaves the estate as she wishes and not take my advise. Could someone please guide me so that she can understand the risks.
Thank you

2

I suppose it’s a variant of the “King Lear Problem”. In bullet points, and not exhaustive:

  • Daughter might fall out with her brother or not feel disposed to help him with the money.
  • Daughter might suffer a gambling, alcohol or drug addiction, or fall under the influence of someone predatory, or the son’s entitlement otherwise be affected by events in his sister’s life.
  • Daughter might die before son and the assets pass under her will/intestacy.
  • Daughter might lose mental capacity and the assets be taken over by her deputy (who is under an obligation to use them in her interests, not his).
  • Daughter might get divorced and the assets wholly/party lost in her divorce settlement.
  • Daughter might become bankrupt and the assets taken by her creditors.
  • s225 TCGA more favourable than son’s house being a second home owned by daughter.
  • Similarly, second home disadvantageous for SDLT.
  • s.89 trusts don’t suffer ten-year and exit charges.
  • Discretionary and s89 trusts disregarded for benefits purposes.
  • Query whether benefits agency could make an argument that daughter holds the assets as nominee for her brother??
  • Can’t comment either way on inheritance tax.

Families do sometimes organise their affairs this way, though.

Hope that’s helpful?

1 Like
3

Hi Andrew

Thank you for your reply. That is helpful. I have a feeling there is something more to this and this is the reason she doe not want a discretionary trust.