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There are all sorts of reasons why Discretionary Trusts can be really useful as a part of your Will planning.

They can be particularly useful to put money (or other property) aside for:

  1. a child (or grandchild) who may need a bit more financial help than other beneficiaries at some point in their life; or
  2. beneficiaries who aren’t able to deal with larger sums of money themselves

The flexibility of a discretionary trust can, for example, help provide financial assistance to a beneficiary at a point in their life when they need it the most, such as to fund their education, or to buy their first house, or to fund additional care packages over and above any state or local authority provision.

What is a Discretionary Trust?

A discretionary trust is a legal arrangement used to protect money (or property). It gives people that you trust (called ‘trustees’) the power to make decisions about how best to use that money for the benefit of someone (or a group of people) that you choose (called ’beneficiaries’).

How can a Discretionary Trust Will help?

Discretionary Trust Wills are very flexible. You decide who the trust is for and, after your death, your chosen trustees decide how best to use that money to help and support your chosen beneficiaries.

Discretionary Trust Wills can be particularly useful if you have children, or grandchildren, that you would like to provide for after your death, but it is not certain which of them will need financial help in the future or what help will be required, or when it wouldn’t be appropriate to put the money in that person’s direct control.

As well as being flexible, discretionary trusts can also have the advantage that the trust money remains outside the beneficiaries’ estates for Inheritance Tax purposes, care home fee assessment and calculating means tested benefits.

Who should be appointed as the trustees under a Discretionary Trust?

The trustees under a discretionary trust have wide powers.  It is, therefore, important to choose people that you trust to make the right decisions on your behalf. If an estate is of high value or is complex it may be sensible to appoint an independent trustee, for example a solicitor.

Are there tax implications?

Discretionary Trusts are subject to special tax rules; for trust funds under £325,000 the rules can be used in a way that is actually pretty beneficial, but it helps to have some specialist knowledge. Therefore, if you are considering setting up a Discretionary Trust Will it is important that you speak to a solicitor experienced in Trusts work.

Advice about Discretionary Trust Wills

For more advice on Discretionary trust Wills or any other aspect of your Will, please contact a member of our Wills, Trusts and Probate Department. Bray & Bray have three main offices across Leicestershire, feel free to phone or pop in to talk to our solicitors.