It is perfectly natural for parents to wish to provide financially for their children where they possibly can. There are a number of methods by which this can be achieved, each of which has its own advantages and disadvantages. However, the use of a trust is one potential course of action that should be considered.
'Trust fund children' have been seen in a very negative light; the phrase is frequently accompanied by preconceptions of entitlement. However, establishing a trust to attempt to give financial security to your offspring can be very attractive in some circumstances. In the first instance, an income derived from a trust has the potential to be better structured than irregular payments made by a parent.
Furthermore, it ensures that the boundaries and timings of these payments are set. This can be useful on several fronts; it ensures that both parent and child are aware of their respective situations, and it presumably mitigates the possibility of arguments.
Encouragement and Incentive
Incentive trusts offer a means by which continued financial support can be made contingent upon the fulfilment of certain requirements. These trusts allow the settlor (that is, the individual establishing the trust) to encourage certain behaviours through financial incentive; if the intended beneficiary does not fulfil certain criteria then they will not receive payment.
In many cases, the requirements attached to incentive trusts are academic. It might be, for example, that regular payments (or a lump sum payment) will only occur if the beneficiary completes their A Levels or GCSEs. This can be particularly important in cases in which the trust is of a very high value; the attainment of certain academic standards is thought to be the first step to encouraging the beneficiaries to work, even if they might not have to when they inherit.
It is certainly true that this sort of arrangement can be reached between donor and beneficiary without the necessity for a trust. However, the use of a trust has several advantages. In the first instance, the legal codification of the agreement helps to ensure that its terms are respected and understood by both parties. Furthermore, a trust means that the agreement will continue unhindered in the event of the death of the settlor or trustee.
Disadvantages
There are, however, a number of potential downsides to the use of incentive trusts. Generally, the conditions set by the settlor relate to easily quantifiable things like academic results or the following of a certain career path. If, however, the settlor's and beneficiary's wishes are divergent, the terms of the trust can create resentment on the part of the beneficiary. As such, wherever possible it is desirable for all concerned parties to have some say in the process of writing the trust instrument.
If you think that an incentive trust is the right tool in your situation, your next step should be to seek independent advice from a solicitor. The establishment of these trusts can be fairly complex, and it is important that the document is prepared properly. As such, professional help should always be sought.
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I am 62 yrs old_ I am sole current beneficiary of a trust set up by my father over 35 yrs ago-if I die unexpectedlythe grandchildren of my father automatically become benficiariesof the trust equally.
I am no longer residing in the uk live in another eu country and am retired-
the trustees of this trustare my siter and two others my father died 3 years ago - so is no longer a trustee-
It seems like every time I wish to get some money for this trust I have to approach my sisterand this causes all kinds of problems ( she resents being in this position) basically she vetts me to see if what I want the money foretcwhich makes me feel like a schoolkid asking for pocket money--she says if the trust is disolved it would mean it would be heavily taxedetc -- its become quite the thorn in my side and she keeps sayong shes going to find out what can be done ( this had been going on and off now for several years..
The conditions of the trust were made for the discretion of the trusteesto decide what ammount / ammounts could be given to me --
my question iswhat could be doneto empower me to have more autonomy - would disolving the trust be unwise ? orcould the trust be dissolved and/modifiedinto a newly update one with better terms for me the beneficiary ?
as far as I know the most ammount in this trust is no more than sevent five thousand-- currently I am retired and have no income apart from a small pension and to be honest I could do with some of the money in it
my sister says things like --there are restrictions on it you cant take more than a few hundered out at a timeetc etc -having said that when i needed a carwhich was 12000there were suddenly no problems !!
do you thinkthat the goal posts are being moved by my sister ?
any suggestions advice on what I can do --also do I have any rights legally to this trust - am I entitled to annual staements and other relevant info ?would it be worth me making an appointment with the solicitor /accountant who is overseeing the legal side etc of this trust
thanks in advance for your support and help
Bobby R - 24-Jan-20 @ 8:24 PM
n/a - Your Question:
I think to set a trust for 4 main reason.1. To be not my accumulation spread between mu children after my death but to keep together on benefits of them.2. To transfer my assets and intellectual property (innovation) to the trust.3. Register business to be owned by trust, to act as holding company4. To accumulate some fund for my successors and to be in future spread under some key rules. If is possible to see somewhere template of trust agreement?Where is the Trust agreement registration office in UK, what is procedure?Thank you
I think to set a trust for 4 main reason.1. To be not my accumulation spread between mu children after my death but to keep together on benefits of them.2. To transfer my assets and intellectual property (innovation) to the trust.3. Register business to be owned by trust, to act as holding company4. To accumulate some fund for my successors and to be in future spread under some key rules. If is possible to see somewhere template of trust agreement?Where is the Trust agreement registration office in UK, what is procedure?Thank you
