Yet another Will one

[TheresAWay]

Sorry this is a long one.

DM (in her 80s) is re-writing her will. She asked each of us (her DCs) what our views were but she listens most to what eldest DB says.

DM has decided to skip a generation and leave her estate to GCs. All well and good except that one GC will never be able to live independantly. DM is now tieing herself up in knots trying to leave her estate equally between GCs but not resulting in the GC who will never live independantly potentially losing all their benefits.

Eldest DB's proposal is that the whole of DM's estate gets put into a trust fund for the benefit of the GCs.

I think this is a silly idea. All GCs are young adults. The time when a legacy would be most beneficial is when they are starting out in life not at some unspecified date in the future. IMO the estate should be split between GCs with the share for the GC who will never live independantly going to their DF (other DB).

The daft thing in all of this is that the estate isnt huge (possibly £200k). Neither eldest DB or DM have considered (or want to entertain) the possibility that the bulk of the estate could disappear in care home fees.

The trustees for this fund would be my two DBs and me. We are not close, we are all in our 50s. My understanding is that this trust could go on for decades. We would be responsible for investing the fund.

I am concerned that eldest DB's motivation for pushing this trust fund idea is that he was trustee for another fund and had fun playing with the money. He is a bit of a miser and very conservative in his views. I dont like the idea of any of the GCs having to go cap in hand to the trustees to ask for money from the trust fund and having to justify what they want to spend the money on.

In the end it is up to DM what she does but I feel that her will could potentially leave a right muddle which will be impossible to untangle. Her intention is to do a nice thing but in trying to be equal between her GCs she is potentially going to wind up doing nothing with this trust fund slowly dwindling in value and GCs only really benefiting very much later in life

Eldest DB told me about this in confidence so DM doesnt know I know. Eldest DB is very pleased with the trust idea. He was happily chuntering away about how enjoyable managing the other fund was. None of what he said was about the beneficiaries. Knowing him he will happily show his nephews and nieces how much the trust fund is worth, expect approval for how good the investments have been then tuck it away again.

If you have got this far well done! What do I do? Do I say anything to DM?

Your idea seems sensible to me. If the GC are young adults give it directly to them. They can spend or save as they see fit. The GC who needs support has the funds go to their parent.
Trust funds can be costly. The amount you're talking about isn't really worth the extra effort and costs of a trust.

Your idea is better. I’d speak to your mother, set out some of the downsides of the trust and suggests she seeks professional advice on the options and pros and cons of each.

If there was more than one trustee your DB wouldn’t have total control.

You’re right about the potential care costs: read somewhere that one in four people need LT care. But that issue applies whatever your mum decides about the will.

Would also depend on the terms around the trust.

Absolutely no point setting up a trust that doesn't pay anyone anything. Ego trip for DB a disaster waiting to happen.

There are different types of trust. Life interest trusts have to pay the beneficiaries the annual interest, however, and if worst comes to worst I would insist on that.

Your DB might be showing off about managing money, but he doesn't know much if he hasn't mentioned disabled trusts. These are established specifically to help GC who get PIP etc and these trusts don't pay tax. As trusts are heavily taxed, this is a big deal and could make a relatively small amount of £ useful to the GC who needs it. Google them, HMRC explains the subtypes quite well.

You might also want to point out - to put DB off - that trustee rules have changed and trustees are now personally liable for any money the beneficiaries think they've missed out on.

Thing is, for 200k, at a return of say 10k pa, halved for tax in a standard trust, that's at most £4-5k pa split between however many GC you have. Whereas a lump sum would help each GC a lot more, and for the GC who can't live independently, could be invested to reap much higher rewards tax free.

Is the non-independent GC the child of Trust Fund DB? Either way your idea is much better: it would be very odd to put a relatively small amount of money in trust for adults; surely the legal fees of setting it up would put the knockers on it.

She could just leave it to her children, much simpler.

Agreeing with Lindy2 - the expenses and time of a trust aren't worth it for such a small sum and so many beneficiaries. But a disabled trust for lone GC does have advantages.

Maybe focus on what a nightmare the admin, tax and legal reporting would be year after year to put DB off.

Here you go: advisingfamilies.org/information-portal/caring-for-others/disabled-persons-trust/

Thank you, thank you. Some good and sound advice. I will do some googling on disabled trust.

No, eldest DB (trust fund king) doesnt have any DCs. In some ways I think this is some of the problem. He sees himself as Head of The Family, unburdened with petty cares about getting started on the property ladder. Sees spending money on a car as a frivolous expense (but happily expects lifts from others who have frittered money on cars and then criticises their driving) so would not want to release trust fund money for one of the GCs to buy a car.

As she doesn’t know you know about the idea go in with how bad the trust will be.

So start by saying something about thinking and researching about what she can do with the money.

Say that giving the money to the kids when they are young and able to put towards a house deposit would be so beneficial to the gc in setting themselves up that it would be a lovely legacy that she has left them.

Then say, the other option would be a trust, but having researched it, it will be a bad idea because the gc aren’t children, there will be heavy tax implications (not 100% about that but my brother has money in a trust and he is facing a massive capital gains tax once it matures. That is Aus though so check) and that they will be denied the money right when they need it most. Ie house deposit.

Also say that whoever runs the trust will be in a horrible position of having to administer money to everyone and that is potentially a source of conflict if the gc disagree with what they are doing. Especially now that they are adults, they will have their own opinions on what to do with the
Money and potential conflict could cause a major rift which is easily avoidable since the gc are adults and responsible enough to decided what to do with the money.

DB is not suitable to be a trustee under those circs. Easy to say that though.

One - sort of - way round it would be for DM to produce a Letter of Wishes to accompany the trust deeds that spells out for what and when money is to be released.

All this is a bit of a hassle though - but it might work in your favour. The legal fees for setting it up should be around 1k, which might put miser granny and DB off.

Oh, and one other thing (I'm on fire this am ) - if HMRC catch wind of Granny deliberately leaving the vulnerable DC out of her will so he/she still gets maximum state benefits, it won't be pretty.

Doing that is illegal, and pretty easy to spot. DWP and HMRC can come after the family £££ to get the DC's rightful share back, and benefits will stop.

Supersimpkin that is a very good point about excluding vulnerable GC. I had a look at the website you linked to and leaving vulnerable GC out was highlighted as a very bad idea.

grupple DM's original will left her estate split between DBs and me so I am aware that some of my irritation with the whole thing is finding out that I am going to be bypassed but at the same time left with being an executor and trustee. Being bypassed to give DCs a start in life is one thing but being bypassed just so that eldest DB can play the stock markets is something very different.

I would point out to your DM that if she leaves all the money to grandchildren then she is leaving your eldest DB out completely which seems unfair.

Another thought - if you have two brothers then could you and the other brother just agree that you will each agree to each grandchild getting their fair share of the money as long as the parent agrees. (Ie If your dd wants £2k for a tattoo on her entire back then you both vote no, if she wants £5k for a car then you both vote yes. Then you will out number the other brother anyway.) Daft waste of money and hassle setting up the trust though.....

Split the money equally but with a trust for the gc who is unable to live independently set up in a suitable way (trustees should be their parents plus one other ideally). That said a trust for all isn't a bad idea as long as the trustees are on an any 2 basis, young people can squander money

Next time he mentions anything about wasting money on cars I would reply that you assume going forward that that means he will be using public transport from now on and will be refusing any lifts in your cars. After the will has been sorted of course

Mumoftwoyoungkids as estate would go to GCs (all young adults) we (DCs of DM) are all excluded.

I agree that young people can squander money. However, I feel that it is very controlling to have a bunch of middle aged people deciding what is or is not a suitable use for money which does actually belong to the young people.

While getting a tattoo may not be how I would want to spend my money, this isnt my money and once DM passes away it isnt her money either.

Eldest DB has strong views on what is or isnt a good thing to spend money on. I could see that running a trust with him could get very tricky. He means well but just doesnt get that what he thinks is a priority isnt necessarily what anyone else considers to be a priority. As he gets older he is getting worse.

I dont want DM's will to create a situation where GCs fall out with their uncle.

There are loads of options here, she could give lifetime gifts instead, leave to her children or leave to grandchildren equally with just the vulnerable GC's share going into a protective trust (similar to disabled trust) with a letter of wishes setting out in what circumstances capital can be advanced. Professional executors are best appointed when there is a trust as they are neutral and used to dealing with what is required. Costs for the prof execs to administer the trust when she dies will depend on how much action there is I.e. if vulnerable GC doesnt ever want any money then costs will be minimal. If GC is getting in touch each week for funds then obviously running costs are increased. Other 'trusts' can be created for the other grandchildren I.e. if she doesnt want them to receive the money until a certain age. Trustees can advance money to them before that age if they needed it, but it would be at the trustees discretion, again with your brother being how he is, professional executors would be best in these circumstances to. The benefits way outweigh any costs implications in the circumstances. End of the day it is her decision and it is best she goes to a reputable legal firm who will offer her good advice!!!!

She needs to see a solicitor - someone who is not related to get an unbiased opinion on writing her Will.

DM is getting legal advice but DB is having a lot of influence. DB does mean well but I think is very suspicious of DM getting the 'right' advice (ie agreeing with his world view). DB is very intelligent but can lack common sense and can be a bit overbearing if he thinks his advice isnt being heeded by DM.

Your brother sounds opinionated and pompous but I feel for him - I think it’s unfortunate that he is being bypassed in favour of his nieces and nephews. That must sting (even if he loves them and has them in his own will) and I imagine he’s putting a brave face on it.

The estate is smallish and things should be kept simple. No need for trusts!

Attempting to divert money in order that the disabled grandchild continues to receive state benefits is a policy that could backfire if DWP finds out and takes a dim view. Your mother won’t be around to deal with the fallout but needs to think hard about it before she does anything.

ConfCall, I'm not sure how he does feel about being bypassed for the GC. He is a bit of a miser but can also be very generous. He is mainly mean to himself, enjoying denying himself things which he knows he would enjoy and could easily afford.

Well, I have spoken with DB and apparently disabled persons trust rejected because of reasons.

What we are going to end up with is a trust so that eldest DB can stop youngest DB getting access to his DD's share. In eldest DB's eyes youngest DB is frivolous with money (ie doesnt hoard it the way eldest DB does).

Eldest DB will take great delight in playing the stock markets. Every now and then he will show his nephews and nieces how much the fund is worth but they wont be able to touch it. At some point eldest DB will go completely dotty and invest the whole lot in something stupid and it will all be lost.

Not sure there is anything I can do about it. It will all probably go on care fees for DM anyway.

You may have to talk about contesting the will how horrible for the children.

Do your own research and talk to you mum.

When my Mum was thinking of the same thing with my db as the controller (a position he desperately didn’t want) we talked about this.

Luckily it seems like she has changed her mind.

I'm not sure there would be grounds for contesting it (other than it being a stupid idea). I will try to talk to DM but I suspect that DB is trying to railroad her into getting it done ASAP.

DM probably likes the idea of there being a trust. She will be expecting that there will be an annual meeting of the trustees where her memory will be toasted with a dry sherry. DB likes the idea of having a trust fund to play with plus the control over how the money gets spent.

All an unholy mess.