Trust funds

[KOKOagainandagain]

Both DS1 (14) and DS2 (9) have an ASD. DS1 may not be able to live independently. I have inherited some money from my mum and want to set up trust funds for both boys (around 20k each) but don't want them to have access to the funds for any reason they see fit. DS1 recently spent £900, in five minute bursts over a single month to buy Fifa packs of virtual players (Microsoft returned the money and I now use strict parental controls/password protect so that he can't do this again).

Can I set up a living irrevocable trust in the UK? And how would I do this? I have googled but most sites assume asset protection or tax avoidance or I get lots of info about child trust funds/ISA which is not suitable as I want to make a lump sum gift/contribution rather than monthly/yearly contributions that become available at 18 and exhausted at 19.

TIA

Why do you want a trust fund? I think you could access the benefits of a trust for them via your will (when the time comes) and save the tax admin on a trust for now. Speak to a Chartered Financial Planner with an Advanced Trust qualification about the pros and cons (tax being a restriction on investments for example - trusts can't have ISA's).

I am a non-taxpayer at present but will be when I can work. I need to ring fence the money whilst I am still alive. I need the money to be kept for the boys somewhere where I cannot access it at all but the boys cannot access it for any old reason. I know that DLA is not means tested but would this effect DS1's award now or in the future or could there be other benefit related consequences once he is officially an adult?

If the amount is higher than £6k and your DS gets income related benefits in future (probably ESA and maybe housing/council tax benefit) it will affect those benefits.

www.sundaypost.com/news-views/uk/woman-left-disabled-by-child-killer-beverley-allitt-ordered-to-repay-23-500-in-benefits-1.857188

DLA would hopefully not be affected but who knows what rules might change in future. You need independent financial advice to put the money in such a way as to avoid benefits being reduced.

Keep on, I'm really not sure you're reasons stack up for a trust - your tax status for amount you're talking about is irrelevant. As for not touching it.. who do you think runs the trust? You. You can 'get' the money if you choose, the trust is only going to protect it to a certain extent. Legally, yes watertight, but someone has to take you to court for breach of trust.

You need advice from a tax expert that knows about disabilities. My brother has just set up some kind of trust for his DC with ASD. As I understand it, legally the money doesn't belong to the DC (so any future support/benefits because of the ASD won't be affected by having too much in savings). The executors (if that is the right word) can however decide to spend the money on items which benefit the DC.

In his will, the inheritance will go the trust fund too, rather than directly to the DC.

There are tax advantages for vulnerable persons trusts, but it's the amount here that means it's really not worth it for the costs and admin. I'm sorry but you'd pay more than it's worth in investment fees, advice and legal fees.