If you are the parent of a disabled child, you might want to think about setting up a trust to provide for them in later life.
You can create a discretionary trust as part of your will. It is an ideal way of drip-feeding cash to a vulnerable person in order to maintain their care.
How do I set up a Discretionary Trust?
When you set up the trust, you nominate trustees who will decide how to deal with the assets in the trust. The term ‘discretionary’ means that the trustees have no right to the assets until such time as they are appointed to them – in other words when the trust comes into effect on your death. Once the trust is in effect, the trustees legally own the assets so pick your trustees carefully. You can choose two to four trustees to manage a trust. If you wish, you can appoint a professional trustee such as a solicitor.
You can set up the trust to benefit more than one person if needed.
There are some additional taxes associated with a discretionary trust however HMRC will not apply these taxes if the trust’s beneficiary has a physical or mental condition that means they are unable to look after themselves. They will however still apply Inheritance Tax and you should take advice on the best way to deal with this.
You will need to consider who you want to run the trust (the trustees), who should benefit (the beneficiary or beneficiaries), what assets you are including in the trust.
A solicitor will be able to advise you as to the inheritance tax implications.
A discretionary trust is a powerful document that can have implications for generations to come, we strongly recommend that you take legal advice when setting up a discretionary trust.
To find out more about setting up a discretionary trust, contact us on 01704 532890 or email email@example.com