Will drafting enquiry

Trusts Discussion
1

I have had an enquiry about putting a beneficiary in a will who is autistic and lacks capacity.

Can this be done or is it not allowed to nominate a beneficiary who you know lacks mental capacity.

I look forward to hearing your takes on this.

Awais Mahmood
Law Lane Solicitors

2

I wouldn’t have thought that lacking mental capacity precluded a person from being a beneficiary. It does, however, raise practical issues. Is there a deputy or attorney who can give the executors a receipt for it? Is it actually in the beneficiary’s interest if he or she is receiving means tested benefit? Is the Testator really happy to give his executors a potential headache ?

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3

Unfortunately, the potential beneficiary has already lost capacity so i think that at the probate stage whatever was left to him in the will would have to be dealt with by the Court of Protection.

I suggested that it would cause practical issues after death.

Any other sugesstions.

Awais Mahmood
Law Lane Solicitors

4

If the testator is still alive, which the first post seems to suggest, they might consider enclosing the beneficiary’s intended benefit within a discretionary trust.

If they do not like the idea of a discretionary trust then the STEP Standard Provisions (2nd Edition) at clauses 6 and 18 do deal with this scenario. STEP SP2 could be included, or just additional provisions in similar terms.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

5

I would consider using a vulnerable beneficiary trust in the will, rather than a standard discretionary trust…

1 Like
6

I will be very lazy and quote from Parker’s Will precedents, but the choice between a disabled person’s trust and a discretionary trust is often down to tax advantages of one over the other (and personally, I would say that a simple gift will lead to all sorts of problems):

"Assuming that the testator is clear about the desired tax advantages and the basic form of the trust then the draftsman can – in very broad terms – choose between the following options:

• A wide discretionary trust providing for flexible provision but not conferring the advantages for either inheritance tax or for income and capital gains tax.

• A discretionary trust qualifying under Inheritance Tax Act s 89 and as a qualifying trust for vulnerable persons.

• An interest in possession trust, capable of being an immediate post death interest and also a qualifying trust for vulnerable persons."