Case Study

 

1. Problem

Paul and Edith consulted us as they were concerned how to protect the future of their youngest child Peter aged 15, who has a learning disability, and who will never be able to live independently.  Peter has two older siblings at university. They wanted all three children to have some share of their estates on death.  They know they do not have enough money to fund private carers for Peter throughout his life.  How should they share their children’s inheritance?

 


2. Solution

Paul and Edith made wills. Firstly benefitting each other, and then after the second spouse dies, 60% of their estates will go to their two older children when they reach 25 years of age, and the remaining 40% will fund a Discretionary Trust set up in their wills. The potential beneficiaries under the Discretionary Trust are all of their children. The oldest son and two close trusted family friends will be the Trustees of the Trust Fund.  By using a Discretionary Trust, rather than a Life Interest Trust, Peter will not lose his State benefits, under present regulations. 

 

3. Benefit

Firstly they have protected each other in their wills. Thereafter they have used a Discretionary Trust to set aside a Fund available to enhance Peter’s life, but without risking the loss of Peter’s State benefits.  Through a Letter of Wishes written to their Trustees they have asked that Peter be the focus of the Trust but have given their Trustees discretion to adapt to circumstances as they arise.  Peter’s older siblings will take their inheritance directly if over 25 when both parents die.  The Trustees can enhance Peter’s quality of life, by applying the Trust Fund to his best advantage throughout his life.

 

The names of the people cited in this case study have been changed for anonymity purposes.