A lifetime Trust for a sole beneficiary
Mr and Mrs Walker have a daughter, Alison who has mild learning disabilities. They have substantial savings and are keen to ensure that her inheritance does not affect her benefit entitlement. By setting up a Trust during their lifetime they may be able to reduce their inheritance tax liability. Their wills also state that Alison’s inheritance is to go into a discretionary Trust rather than being paid to her directly. This should protect her entitlement to means-tested benefits. On Alison’s death, any money left in the Trust should be treated as if it formed part of her own assets. Since Alison has capacity, she can have a Will of her own.
A testamentary (Will) Trust for a class of beneficiaries
Carol is a single parent with two sons, Peter and Andrew. They both have autism. Carol has written a Will leaving her entire estate to a Discretionary Trust for the benefit of both Peter and Andrew.
Providing for Grandchildren
Mr and Mrs Collins have four children and six grandchildren. One grandchild, Jack has Down’s Syndrome. Jack is seven and the extent of his needs are not yet known. Mr and Mrs Collins want to provide for Jack in their Wills but they don’t want to leave money to him outright or give it to his parents. They set up a Discretionary Trust in their Wills, which will become active on the death of the second grandparent. They have chosen all of their grandchildren and great-grandchildren as beneficiaries. In a Letter of Wishes, they have outlined to the Trustees that they want them to consider Jack as the main beneficiary of the Trust. Only after his death should the Trust Fund be divided between the remaining grandchildren (or their children) equally between them.