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STEP lawyer preparing DoV & Trust

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  • STEP lawyer preparing DoV & Trust

    We specifically picked a STEP lawyer for expertise in such matters. The DoV is to change our inheritance through the intestate pathway of money we know the deceased would want directed to his young nephews (our grandsons).

    We have clearly advised him that we don't want the trust accessible until the beneficiaries are 25, though the trustees have discretion to make interim payments (education etc).

    I've since read that this is likely to be unenforceable, that in English law the beneficieries would have a right to it, if they wanted it, at 18.

    Is this correct? I have no wish to pay a high fee if we are not being advised appropriately. We don't need an unenforceable trust.

    PS Made sure he understood we wanted a Discretionary Trust, not a Bare Trust.
    Last edited by SevenOfNine; 14th August 2016, 17:25:PM.
    Tags: None

  • #2
    Re: STEP lawyer preparing DoV & Trust

    Tagging @Kati; [MENTION=39710]des8[/MENTION]

    Comment


    • #3
      Re: STEP lawyer preparing DoV & Trust

      Originally posted by SevenOfNine View Post
      We specifically picked a STEP lawyer for expertise in such matters. The DoV is to change our inheritance through the intestate pathway of money we know the deceased would want directed to his young nephews (our grandsons).

      We have clearly advised him that we don't want the trust accessible until the beneficiaries are 25, though the trustees have discretion to make interim payments (education etc).

      I've since read that this is likely to be unenforceable, that in English law the beneficieries would have a right to it, if they wanted it, at 18.

      Is this correct? I have no wish to pay a high fee if we are not being advised appropriately. We don't need an unenforceable trust.
      In short, the court can act for the best interests of the minors, not just for its sake. If there is a clause that stops the kids having access before they turn 18 this should be enforceable. Anything beyond 18 - where they're minors now but in their adulthood - may not be enforceable, ie age 25, unless there is good reasons. However, the discretionary trust might cover this problem. This is probably why there is a discretionary trust so the trustees at their discretion can choose who to look after, ie maintenance and other things.

      Comment


      • #4
        Re: STEP lawyer preparing DoV & Trust

        I suspect that you are looking at an "18-to-25 Trust" where briefly:

        a. Property is held on trust for the benefit of a person;
        b. Who has not yet attained the age of 25; and
        c. At least one of whose parents has died.

        The trust must be established under the will of a deceased parent (or step parent)of the beneficiary.

        The terms of the trust must be that at the age of 25 (at the latest), the beneficiary must become absolutely entitled to the trust property, any income arising from itand any accumulated income.

        Until the beneficiary attains the age of 25, trust property may be applied for the benefit of the beneficiary.

        There are limits on the amount that can be applied

        Comment


        • #5
          Re: STEP lawyer preparing DoV & Trust

          As parents (me 61 & hubby 67), we have inherited via intestacy from our deceased son (no partner or kids). We want to pass 100k to our 2 grandsons age 6 & 8 (our other son's children), so decided a DoV would be better than gifting, we definitely don't want or need it & are doing what we know our late son would have wanted. Our other son already has 273k left to him from his brothers pension & death in service benefit (outside of the scope of his estate), so we are all in agreement on this course of action.

          The 2 of us will be trustees, the trust to run until age 25 at the latest. No other subsequent grandchildren to be included & we will be able to make payments along the way from the trust to either child but not to the detriment of the other (our intention is that the end result by 25 at the latest will always be 50% each).

          There are a lot of scenario's/fine tuning we'll need to cover, reinvesting interest, tax payments, tragic events before they reach 25 etc. The solicitor seemed a bit half hearted when I said we think we want a discretionary trust so we can determine a responsible age to wrap up the trust (that certainly isn't 18), & that we wanted to be able to make interim payments to benefit both/either grandson along the way before the 'wrap up' age.

          He said "well, I can make it one if you want, but really, who's going to object if you make any early payments to either grandson". Also, he did seem rather keen on the age of 18. TBH we want what we want, not what he wants! Having said that, it has to be legally workable.

          From the answers it does sound like we're on the right track I think.

          Comment


          • #6
            Re: STEP lawyer preparing DoV & Trust

            Originally posted by SevenOfNine View Post
            As parents (me 61 & hubby 67), we have inherited via intestacy from our deceased son (no partner or kids). We want to pass 100k to our 2 grandsons age 6 & 8 (our other son's children), so decided a DoV would be better than gifting, we definitely don't want or need it & are doing what we know our late son would have wanted. Our other son already has 273k left to him from his brothers pension & death in service benefit (outside of the scope of his estate), so we are all in agreement on this course of action.

            The 2 of us will be trustees, the trust to run until age 25 at the latest. No other subsequent grandchildren to be included & we will be able to make payments along the way from the trust to either child but not to the detriment of the other (our intention is that the end result by 25 at the latest will always be 50% each).

            There are a lot of scenario's/fine tuning we'll need to cover, reinvesting interest, tax payments, tragic events before they reach 25 etc. The solicitor seemed a bit half hearted when I said we think we want a discretionary trust so we can determine a responsible age to wrap up the trust (that certainly isn't 18), & that we wanted to be able to make interim payments to benefit both/either grandson along the way before the 'wrap up' age.

            He said "well, I can make it one if you want, but really, who's going to object if you make any early payments to either grandson". Also, he did seem rather keen on the age of 18. TBH we want what we want, not what he wants! Having said that, it has to be legally workable.

            From the answers it does sound like we're on the right track I think.
            An inter vivos (during lifetime) trust, as a discretionary trust ('absolute discretion' terms) is a good idea if you want to protects money and assets for the children. It's your estate so you can decide the conditions you choose, ie conditioned inheritance. The court will step in to act for the interests of minors via the Variation of Trusts' Act 1958 but only whilst they're minors, including bringing the trust to an end so they can claim the assets. When the minors grow up to bring the trust to an end as adults, ie sui juris (of age and capacity), they can do it based on case law: Saunders v Vautier (1841). As far as am aware discretionary trusts over-ride any attempt for the children/ or when they grow up to force the assets. The reason for this is that there must be an object, ie named beneficiary whereas a discretionary trust with beneficiary names are subject to the trustee's discretions. So, you could start a trust during your lifetime but keep the children as remainder interests (ie when you both pass away), or make a discretionary trust as term of either of your Wills, or both Wills together (mirror Wills).
            Last edited by Openlaw15; 14th August 2016, 21:04:PM.

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