A Trust as an entity

[alanwpickup]

Hi
My wife and I are the parents of one son, an only child, who has mild LD but manages to hold down employment with the local council, so will have a pension from his employers plus state pension. So in general we are not planning about ensuring his benefits and support continue, although he does have DLA (soon going for his PIP assessment which could change the situation). Our main concern is that he is not capable of managing monies and is very vulnerable, if someone should take advantage. We are therefore looking for a means for someone to control his inheritance from us and any monies we can accumulate when we are not there to guide him

I recently attended a Mencap Planning for the Future Seminar and understand the types of Trusts and what you should do with layering of Trustees etc. What I am unsure about can is what is a trust in legal terms, does it have to be registered somewhere to exist? Can you set up a Trust yourself or does it have to be done by an institution with legal status like a trust company, bank or solicitor? The other item I am not sure about is the tax implications with Life time trusts on items like interest on monies held. At the moment we are saving monies in cash ISA’s which are tax exempt and all taking advantage of the tax free allowance on interest. Is there a disadvantage on allowances if you set up a lifetime Trust? Would be interested to hear form anyone who has had experience of this or the expert members of the Hub.

Regards
AlanP

[charlie1]

I cant see that anyone has replied but I will try to give my views which is not advice so seek that elsewhere
.My wife and I wrote to mencap about Trusts and got the info back.Basically you put some or all your money/assets into a fund that is not part of your son’s assets.I did mine through a solicitor that was offering the service though a charity week.You pay him for drawing up the will including the trust and he donates this to a charity.Much cheaper than National Mencap, however we might come unstuck! Mencap were not willing to have a relative as a trustee.Having a trust means that your son will keep his benefits because the money is not his capital., in otherwords you are trusting someone to hand out bits of money for extras like TV, Computer or roof repair or holidays.They(the trustees) will look at this and sort it out.You can and should write a letter of wishes which the trustee will read and hopefully obey if reasonable…We have not reached an age where we are “terminal” but think about what you want to happen with any funds that are left after your son’s death such as going to cat rescue or national mencap or the local mencap if you have one.
We have a second son who we have also included in a separate trust mainly because I am sure he wound booze the inheritance away and also so that he keeps his benifitsUnfortunatly he cant work becuase of blindness(I know that does not stop him but that is a different story).The trust would help in emergency for extra furniture carpets and if any accident was to occur to his dogs if he still has them.
Nowadays a trust document is just kept at the solictors office with you having a copy as well.I can now see why years ago some family in Agatha Christies novels would always be looking for a will that had not been lodsged at the solicitor!
Good luck but seek the right adviceNational Mencap s Trust is sorted by a trust company and someone would see your son from time to time to make sure all his needs are catered for.which is why it costs more.They also look after the tax implications.

[alanwpickup]

Hi Charlie

Many thanks for your input, all of which is valuable when someone has gone through the process. I can see the advantages of Mencap Trustee services and in comparison to Banks and solicitors acting as Trust Managers they are very reasonable. I am a Trustee of a charity that has also had will writing service provided by solicitors who donate, their expectation is the will make their monies when they administer the will. Our problem is our son has is own monies because he has worked and basically lived free with us. I do not think he will ever be in a situation of needing benefits other than DLA or PiPs, but we want both his and our capital to go on having tax free advantage of ISA for as long as possible. I have got my head more around the issue since my post and once I put the solution in to process I will share this with the Hub.

Once again thank you for your input.

[SarahL]

Hello @alanwpickup

I have just been reading your post. How are you getting on with this?

Best wishes
Sarah

[alanwpickup]

Did not progress down the trust route as it appears it is not an entity but a pot of monies administered by trustees. We Will as likely buy a property close to where we live in his name with his monies and gain rent, with the expectation that he will live there eventually and our property and monies will be put in a trust deed via wills

Regards
Alan Pickup

[SarahL]

Hello @alanwpickup

Many thanks for the update.

Cheers
Sarah

[islarae]

Hi Charlie

your post sounds more like the sort of thing I would want to set up, so just to be clear I can go to a solicitor, ask them to set up a trust and name the trustees (probably cousins) and then it is lodged with the solicitor and copies with the trustees so that when we are no longer here the trustees can manage the fund/buy property/pay for holidays on behalf of my children etc. and this will not affect their allowances/social care funding?

thanks

[charlie1]

Hi Islarae
In a nutshell,yes, however when the Trust is set up and you die all your money goes into the trustees care and it is no longer belongs to your children and that is why benefits are still allowed.You need to take advice on the house though because if that is in your childs name and belongs to them social care funding may see this as capital and slap a charge on it.I dont know if it would work if the cousins bought it in there name and your children pay rent!The trust fund has to be used at the discretion of the trustees.National Mencap will post you a copy of book about trust funds and willswhich can give a lot of information.I am not a legal bod and I found this a bit of a minefield trying to understand how it works.I did work as a nurse and as such did assessments with social workers for people in care and the social workers would assess finances for care.The care side seems to hurt a lot of people because if they have more than£23000 (the sum might have changed now) they would not be helped to fund a nursing home and this magic sum is probably the same for any sort of socail care funding.The richer you are the more social funding cant be used.It seems unfair when some poor people can drink,smoke and gamble there money away and get free care!?!But they will not get a choice of care home and only the less posh places that will accept social care funding.So if there is not a problem with money you can choose the best.Living in Scotland the rules may be different.When you make a trust you can leave a letter of wishes to guid the trustees.The trustees are not legally bound to do as you wish and I am sure that some where ages ago some trustees may have run off with the money and probably that is why it is best to employ a solicitor who would also hold the fund and act as a trustee also.
good luck and if I can help any more.
Charlie