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Flex Your Wishes as Things Change
What are Discretionary Trusts? Well, they’re a type of Wills Trust that differ from other types of Trusts in one major way: they have flexibility.
Normally, a Trust is set up with fixed instructions on how the assets are handled, but a Discretionary Trust allows the Trustees to adapt as situations change. It’s useful if you want your assets to be distributed dependent on the Beneficiaries’ situation at the time.
You want to cover any future children in the family even after you’re gone.
You have a Beneficiary who doesn’t have the capacity to manage their finances.
You’re concerned a Beneficiary won’t make good choices with the assets.
You have Beneficiaries who aren’t old enough to inherit from your estate yet.
How Can a Trust Help me Protect my Assets?
Choose exactly who has access to your assets.
Enjoy your privacy – Trusts aren’t public documents, unlike Wills.
Save on inheritance tax – don’t let your loved ones lose out.
Provide better financial support for your dependants’ futures.
Give your loved ones quicker access to their inheritance when you’re gone.
Gain better flexibility over how your assets are managed in the long-term.
The Trusts we offer are an optional addition to our Bespoke Will service. Click here to find out more about Bespoke Wills.
Who Can I Appoint as a Trustee?
You’ve got to make sure that no matter what type of Trust you’re creating, you choose responsible and reliable Trustees. All Trustees (and there can be more than one per Trust) must meet the following criteria:
They must be at least 18 years of age.
They can be a family member, friend or professional acting on your behalf.
If you’re creating a Trust which will be effective whilst you’re alive, you can be the Trustee.
You must be confident that they have the best interests of the Beneficiaries at heart.
We advise you to choose at least 2 Trustees, but no more than 4. Make sure there’ll be no tension between the Trustees.
If you’d rather have someone outside of your family be a Trustee, you can appoint a professional such as a solicitor, Trust company or accountant.
They’ll need to fully understand the responsibility of managing the Trust on your behalf.
It’s a good idea to name substitute Trustees, to replace a Trustee should anything happen to them.
Discretionary Trust Case Study
A Trust can include any wishes about how your estate should be handled by the trustee, and you are able to express more complex wishes in how you’d like your estate to be managed.
Heather and Mark have 3 children and 5 grandchildren. They have several properties and a large nest egg that they’d like to distribute between their children and grandchildren after they’re gone. Only 2 of their children currently have families themselves, and they’re all named as Beneficiaries in Mark and Heather’s Wills Trust.
After Heather and Mark die, the Wills Trust comes into play, and their children and grandchildren all have access to the assets within the Trust. However, their third child then goes on to have a family of their own, but their kids aren’t automatically included as Beneficiaries in the Trust so they don’t get the same access as their cousins to the assets in the Trust.
This causes some animosity within the family, as there’s a feeling of being left out. Beneficiaries can’t be added onto a Trust once the Settlor has died, so there’s no easy fix to the situation.
How would a Discretionary Trust Help?
If Heather and Mark had opted for a Discretionary Trust over a standard Wills Trust, the Trustees could have chosen to make provisions to new grandchildren within the family. They would have been able to add them into the list of Beneficiaries if the Letter of Wishes made allowances for this. By choosing this option, all of the grandchildren would have had equal access to the Trust and felt as if they were being treated fairly, avoiding any family arguments.
Things of value you have in your possession, which are able to be passed on to another person.
A person who receives money or other benefits from a Will or Trust.
A person who relies on another as a primary source of income.
The sum of a person’s assets – legal rights, interests and entitlements to property of any kind – less all liabilities at that time.
Passing on private property, rights, and other assets upon the death of an individual.
A tax on the estate (the property, money and possessions) of someone who’s died.
Government standard rules which apply when someone dies without leaving a valid will, which dictate who is able to inherit that person’s assets.
A document that is able to be accessed by anyone should they request it.
The person or entity that establishes a trust.
A person who is given the responsibility to manage assets that have been set aside in a trust for the benefit of someone else.
A legal document that expresses how a person wishes their assets to be distributed after their death.
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