Discretionary Trusts - Case Study
The People
Mr and Mrs C had an estate of £500,000. They had two children, A and B. B suffered from Downs Syndrome.
The Problem
If Mr and Mrs C left a half share of their estate to B, he would lose any means-tested state benefits. In addition, a Deputy would need to be appointed by the Court of Protection to deal with B’s funds on his behalf.
The Solution
Mr and Mrs C left a half share to A outright. The other half share was left to a discretionary trust of which both A and B, and any grandchildren, were potential beneficiaries. They left a letter of wishes to their chosen trustees to the effect that the trust fund was to be used primarily for B’s benefit during his lifetime and, on his death, the balance could be paid to A, his children or grandchildren. As the funds would be in a discretionary trust, and the trustees were not legally bound by the letter of wishes, B would not have any right to the funds in the trust and would, therefore, retain his state benefits. In addition the trustees would manage the funds so that a Court-appointed Deputy would not be necessary.
Who to contact
Shaun Parry-Jones
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