Q: Currently my daughter and her fiancé live together in a home they bought on joint mortgage. I believe they plan to get married later this year but I am not convinced they will or even if they do that they will stay together in the long term. She is my only child. If I leave everything in Trust for her when I die, will it prevent her fiancé from having any entitlement to it? Also, are there long term costs associated with setting up a Trust?
A: In order to protect your estate, the best option is to set a Discretionary Trust within your will. The Trustees will hold your assets on trust and they will have the discretion as to which beneficiary to give money or property to. No beneficiary of a Discretionary Trust has an absolute right to receive any funds from the Trust. By putting your estate into a Discretionary Trust it will prevent your daughter’s fiancé from having any entitlement to receive anything.
It is advisable to write a letter to your Trustees setting out your aims and objectives of the Trust as guidance as to how they should distribute the Trust. This letter is not binding on your Trustees.
There are long term costs associated with the setting up and administration of a Discretionary Trust. Annual accounts and tax returns have to be completed. Tax has to be paid on any income received by the Trust. There may also be Inheritance Tax and Capital Gains Tax to pay periodically. Trustees will also need to take legal and financial advice and the cost of such advice is paid by the Trust fund.
(Article published 12/06/2017)