How to achieve this in a will?

[LakieLady]

I need to make a will. My DP died last year, and we had been talking about how to deal with our estate, so I know what he would have wanted and intend to act accordingly.

There will be a few k in savings, but the main thing is the house, worth approx £450, no mortgage.

I have no family, save for my brother, who has bi-polar disorder, has £20k in savings, is on disability benefits, lives like a recluse, spends next to no money and owns his home outright. He doesn't want or expect anything to be left to him.

DP has a son, who is an only child, and grand-daughter. DP's GD lives with her mother in a rented flat. Her mother is low paid and gets UC towards her rent.

Son inherited a large trust fund at 22, bought a house with a small mortgage and has his own successful business. He also stands to inherit properties to the tune of at least £1.5m when his mother dies (unless it all goes in care costs). His mother also stands to inherit approx £350-500k from her father, so the value of her estate will be considerable. He is in a good position financially and is likely to be very wealthy when his mother dies. (Although she is not yet 60, she is in poor health and has an alcohol problem.)

DP and I agreed that we would leave the lion's share of our estate in trust for DGD, so that when she reaches adulthood she will have the same sort of opportunity as his son did. We also wanted to leave a significant sum to her mother, with whom we were close, so that she can make a nice home for DGD to grow up in, and to give her some security. However, I'm mindful that simply leaving her money will mean that she will lose her entitlement to UC and have to pay her rent out of any inheritance.

We thought about a trust that would enable DGD's mother to use the inheritance to buy a home outright, but with half the value held in trust for DGD, but that then raises the issue that if her relationship with DGD were to break down, DGD could be in a place where she wants her share and her mother would need to sell to enable that.

What would be the best way to set up some sort of discretionary trust that would enable a good chunk of the money to buy a home for them as a family, DGD to get enough for a deposit on a home when she reaches majority, and for it to be set up in such a way that DGD can't make her mother homeless or anything? It needs to be a discretionary trust to preserve mother's current benefit entitlement. Ideally, if there is a way of minimising IHT as well, that would be good.

We are in the expensive SE, so I'm thinking £300k would be enough to buy a home for now, with a small mortgage, plus £100k left in trust for DGD to maybe buy somewhere with a BTL mortgage. This would generate income and then ultimately be available for DGD to sell or to live in, when she reaches maturity, or finishes her education.

There would be a couple of small bequests, to DP's son and to a very niece, maybe £50k in total.

I'd like to have an idea of how this could be done, before I go and see a solicitor to get it drawn up. I have suitable people in mind to act as trustees and they are happy to take on this role.

If relevant, I'm mid-60s, DGD's parents are in their early 30's and DGD is 5.

All advice gratefully recieved!

Your solicitor will take care of this. All you need is a discretionary trust and a letter of wishes expressing what you wish to happen. I would recommend having independent executors who will make sure this happens rather than the family members themselves.

Sorry, missed out a word - the very niece is a very much-loved niece!

If your going to leave the DGD mum a large sum I wouldn't worry too much about her losing UC as they would probably happen anyway and technically if she has money she won't need it

Agree that you need a professionally-drafted Will, with independent (preferably professional) trustees. Don't scrimp on this OP because it really is worth paying for someone decent to draft the documents.

As you’re relatively young, it is likely that your gd will be an adult by the time she receives her money from you, and your thoughts about her mother making a home for her growing up with your money will be too late. What a shame your son can’t do more for her now with his own trust fund and successful business.

(Step-son, sorry)

Blimey, that was quick! Thanks @kerosene20

So just one trust, to benefit DGD and her mother?

For trustees, I am minded to have one of DGD's maternal aunts, who is very canny with money and level-headed, DP's sister, who is likewise, and the much-loved niece. I'd like three, I think it's better than 2 in case they disagree.

What a shame your son can’t do more for her now with his own trust fund and successful business

Isn't it just @Woodspritely! When they split up, DP was really quite upset that his DGD was living in a shitty one-bed flat with no outside space, while her father was living alone in a 3-bed house with a big garden. especially in the spring lockdown. In fairness, he pays the mother a decent amount of maintenance every month, and is currently only working 3 days pw so he can home school for 2 days when her mother is working. Mother has had to give up her other 3 days pw work because of the schools being closed.

Yes, it would be awful of someone had so much money that they didn't need to claim benefits, you need to ensure you avoid that at all costs! 🙄

It all sounds a bit patronizing to me, you deciding their lives decades in advance. Why don't you give them some money now so they can live somewhere nicer? The mum might be able to get a job once the child goes to school too.

I don't have any money to give them @VanGoghsDog!

The only asset is the house I live in, and a few grand in the bank that I need to keep as I am on a low income. And if someone had left me provision to get a decent home, I wouldn't feel patronised at all, just grateful!

And mother has a job, in fact she had 3, until lockdown meant that childcare and home schooling meant she had to stop 2 of them.

As a welfare rights adviser, I am very aware of what happens when tenants on benefits inherit capital. Unless it's enough to buy a home outright or under shared ownership, they end up spending all the money on rent and living expenses until it's under £16k, so they derive little benefit from inheritance in the medium to long term.

In my DH family there has been a number of instances of people being given life interest in a property. Being able to live in a property that was bequeathed to someone else and the maintenance of the property paid for out of a trust set up for this purpose. Then when said family member died or for some reason chose to move, the life interest ceased snd the beneficiary received the property and funds in the trust. Maybe this is a type of arrangement you may consider for the DGC mother as it provides her with a house bd funds to cover maintenance but it not owned by her. You can also ensure the house then passes to DGC. So the DGC has a home to live in with her mother growing up without worry about maintenance. Mother has no cash or assets to declare so hopefully could see her way out of UC without worrying about housing costs.

If there are sufficient funds for the DGC to also receive set up upon reaching a certain age or provision that funds from trust could be used for education earlier that reaching a certain age.

It's not that you're giving them the means, it's that you're trying to design it so they don't lose benefits/buy a btl etc.

Thanks, @SaltyTootsieToes. We considered that, but DGD and her mother live in another town approx 10 miles away, and school, friends and family are all there.

They wouldn't want to live here, especially as mother doesn't drive.

I wouldn’t want some kind of trust for my child that someone else has control over through executors it smacks of telling people how to live, I think you either should spend money while you live so you don’t leave much to pass on or gift them money when it’s needed now not theoretically in the future.

I think you're wise to consider the potential impact on benefits, but of course there's no knowinh what regulations will be in force in the future.

re the trustees, can you appoint an independent person?

So sorry about the loss of your DP

Op, you could be going strong for 30 years.

A LOT could happen even in the next 10-15 years.

DGD mother could, and probably will meet someone and get together with them. They might be wealthy, or not. She might get a well paid job as GDG settles in school.

You might, in time, meet another partner.

By the time there is an inheritance DGD might have a great job and have bought her first flat.

So I would really not worry about too much micro management in your will. I would leave it to your GDG, in trust until she is 18.

Have you named a beneficiary of your pension? You could name GDG mother as the beneficiary, and change it if her circs change, because that can be done very easily and at no cost. If it is a sizeable pot you could split it between her and your brother.