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Discretionary Settlement

(14 Posts)
ChipperCharlie Sun 17-Apr-16 22:21:39

I've received a letter with a form enclosed, stating that the trustee appointed by my deceased relative prior to their death are now considering the distribution of the settlement funds. It says I'm potentially a beneficiary of the settlement.

I'm confused though. How does this differ from someone's will whereby the deceased states that 'X amount of money and my china tea set goes to...' ? And why would someone chose this instead of a will?

I'm really surprised about receiving this - I adored this particular relative and miss them - we had some great laughs and chats. I never imagined they thought this much of me.

ChipperCharlie Sun 17-Apr-16 22:25:29

Oh, meant to add - the form asks all sorts - from my health to my net income. Why all the questions?

LineyReborn Sun 17-Apr-16 22:28:31

I'd ask to see a copy of the will.

ChipperCharlie Sun 17-Apr-16 22:31:54

Thanks for the quick response Liney. Do I contact the trustees themselves? It's part of a large Bank here in the UK.

CountryBumpkin200 Sun 17-Apr-16 23:36:42

Discretionary trusts were a big thing prior to the availability of the transferable nil rate IHT allowance; it meant that couples could still get the best benefit from two lots of nil rate allowances whilst the surviving spouse could still get the benefit of the assets.

Discretionary trusts are still used either to protect assets from being taken into account for care home fees, as well as protecting beneficiaries. Say one of the beneficiaries was very careless with cash or still young, then the trustees could use their discretion as to how much and when any cash was released to them. Additionally it can be a tool if the testator is not find of a beneficiary's spouse.

Or, it could just be the testator wanted their assets dealt with dependant on the beneficuaries' circumstances at a later point.

Essentially there are many reasons a discretionary trust was used, but the important point is that none of the potential beneficiaries of the trust are entitled to inherit but only to be considered to inherit. That may be why you're being asked about your financial circumstances.

Sootica Mon 18-Apr-16 05:17:00

A discretionary trust is just that, the money has been put in trust and the trustees have discretion as to what to pay to who. The trust could have been set up in the will or completely separately. You could ask for a copy of the trust provisions that explains how they will make their decision. They are likely to look at how dependent you were on the deceased and how in need of the money you are which is probably why the health questions are relevant.

ChipperCharlie Mon 18-Apr-16 18:18:09

So, if I'm poorly and on a shit wage, technically Id get something? And if I'm in decent health and on a good wage, I'd get zilch?

Do I declare my income AND DH's?

CountryBumpkin200 Mon 18-Apr-16 21:10:20

It's entirely up to the trustee(s)

ChipperCharlie Mon 18-Apr-16 22:49:20

Traffic bump

gingeroots Tue 19-Apr-16 08:55:45

Just to say that it's easy enough to get a copy of a will from

though I don't know how much if any detail it will give about the trust .

gingeroots Tue 19-Apr-16 08:59:53

There's a thread on trusts on the Motley Fool forum ( that a kind MNetter alerted me to )

which may be of interest .

ChipperCharlie Thu 21-Apr-16 21:10:12

I still don't understand I'm afraid.
What I want to know is
1. How the trustees make their decision.
2. How do they decide how much to give?
3. If I decide that I'm comfortable for the moment, would I be able to apply for it at a later point should Infall on hard times?
4. Why would someone choose one of these trusts instead of making a specification in a will? It seems a real faff and essentially, strangers in a bank will now decided whether I'm eligible worthy which to me, defeats the object of being considered in the first instance.


Collaborate Fri 22-Apr-16 10:07:07

You may understand more when you see the trust instrument - be it the will or not.

gingeroots Fri 22-Apr-16 11:26:18

Have you tried asking over on Motely Fool forum ? I've had very clear replies to specific questions I've asked which I've found helpful .

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