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Discretionary Will Trust

TAYLOR LUCAS PARTNERSHIP

With you every step of the way

What is a
Discretionary Trust?

You can use a Discretionary Will Trust to place your estate, or part of it, into a trust created in your will, to be managed by your chosen trustees. You name potential beneficiaries of the trust and give your trustees discretion over which of the potential beneficiaries will receive the capital and income from the trust, when they will receive it and how they will receive it. You can leave guidance to your chosen trustees in a Letter of Wishes (LOW).

Because the trustees you appoint will have total control over when to release a beneficiary's inheritance, it enables greater flexibility. Here are some examples of when a Discretionary Will Trust could be useful;

  • You have someone you want to benefit but they can’t manage their own affairs due to mental incapacity

 

  • You have someone you want to benefit but they are in receipt of means tested benefits and would lose these benefits if they inherited a lump sum of money outright

 

  • You have someone you want to benefit but they are at risk of wasting their inheritance, perhaps because they have an addiction or mental illness

 

  • You have someone you want to benefit but they are in a troubling relationship or marriage and you feel they could be influenced to part with the money if they were to inherit outright

 

  • You are part of a blended family and want to ensure your wealth passes to your own children for example and not ultimately to your partners own beneficiaries. We call this sideways disinheritance

 

  • You have someone you want to benefit but they are financially irresponsible and poor with managing money

You may not be able to relate to any of these points currently, but you may in the future. A Discretionary Will Trust allows for any change in circumstances during your lifetime so rather than amend your Will each time, it is only your Letter of Wishes that needs to be adapted.

This content is for general guidance only and should not be regarded as legal advice.

 

As of June 2024, the Inheritance Tax threshold for a single person living in England or Wales is £325,000. The Inheritance Tax rate is 40% on anything over this threshold, or 36% if you leave at least 10% of your estate as gifts to charity in your Will.

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