Beneficiary of trust deed - their rights?

[Morven11]

Is the beneficiary of a trust deed entitled to see the trust document? DCs are beneficiaries and the trustee - an estranged family member - is being very difficult. To one of my DSs, she is paying out money in dribs and drabs and demanding a lot of information eg where he is studying etc. He's over 18. He has nothing in writing from her and is nervous about asking in case she decides not to dispense any monies for a very long time.

Things fairly critical now in his life but the trustee is still keeping him in the dark about his actual entitlement - how much the original legacy is (as she refers to it) and what, if any, the conditions are.

If the trust was created by a will anyone can get a copy from the Probate Registry.

Thank you for this - the trust doesn't appear to have been created by a will. I don't think that the will referred to discretionary trusts for the grandchildren but I should check. The settlor (right word?) held certain investments and I believe that the trusts came out of these and she appointed, very unfortunately, family members who have kept us, and most importantly, our beneficiary DCs, utterly in the dark.

Have you got legal insurance on your house insurance?

If you do, you could ask them - I'm sure they would know.

It sounds like a rubbish position that your ds has been left in. If the trustee is behaving so appallingly when administering the trust, then it might also be worth finding out if there is any mechanism for removing them as trustee and getting somebody else to administer the trust - if the person liked your dc enough to leave them money in a trust (and take on board the accompanying set up costs and hassle vs just a line or two in their will to leave it to them) then they must have wanted your dc to actually receive the money rather than get drips and drops randomly at the whim of others.

It might also be worth investigating if there are any tax implications for your ds - you don't want to discover that he is expected to pay tax on say £10K as that is what he is supposed to have got in the tax year but he only had £1K so is left paying more out than he got - or that he is supposed to have had £10K a year but got £1K in one tax year and £19K in the next tax year which means that he gets screwed on tax as he doesn't benefit in the first year from being able to use his tax free allowance. Or whatever else they might hold in store - as you can tell I'm not an accountant or anyone that knows about this stuff - just that I know I need to ask questions about things like this!

Hope you get to find things out. And it might be worth getting a copy of the will from probate just in case it mentions the trust or has any other info of use in it!

If it's a discretionary trust the beneficiaries cannot insist on payment.

The fact that the trustee refers to the settlement as a "legacy" suggests to me that the trust was created via a will. If so you can get a copy from the Probate Registry for £10.
There are generally two types of trust.

A life interest trust gives the named beneficiaries the right to income from a capital sum, usually for life but could be for a shorter period. On their deaths the capital passes to the "remainderman/men" who would also be named in the trust deed. The life tenants are table on all the trust income to which they are entitled regardless of whether or not it is actually paid to them.

A discretionary trust lists classes of beneficiaries, eg my children and grandchildren. No-one has a a right to capital or income; it is purely at the trustee's discretion as to who receives payments, how much and how often ( if at all). With this type of trust it is usual for the settlor to have prepared a Letter of Wishes which provides guidance to the trustee on how the funds should be used. The Letter of Wishes is a private document which does not have to be disclosed to anyone. You will not be able to get a copy from the Probate Registry. From your post I would think that this is the type of trust that you are talking about.

The fact that the trustee is asking questions about your DS's study is good. It means that she is taking her role seriously and giving proper consideration to his needs rather than just handing out money willy-nilly.
If he wants to ask for more money then I suggest he goes to her with a proper cash flow statement ( income and outgoings) highlighting any shortfall and asking if the trust can plug some/all of the gap. This is likely to go down better then just asking for say a £1000.

Don't forget that income received from a trust is taxable. If your DS has already received income then he should also receive a form R185 each year from the trustee showing how much income has been paid to him and any associated tax credit ( the trust has to pay tax on income). If he is a none / lower-rate taxpayer he should be able to reclaim some /all of the tax by completing a form R40 and sending to HMRC.

If the trust was created in lifetime and not via a will then the beneficiary may not demand to see the trust deed.

Hope this helps.