There are numerous issues which can arise when a vulnerable beneficiary (a person who is mentally or physically disabled; or someone under 18 who has lost a parent through death) inherits a sum of money from an estate if no safeguards have been put in place. Often these safeguards take the form of trust provisions incorporated into your Will which allow your executors, who would act as the trustees, to hold funds on behalf of the vulnerable beneficiary until either a certain age or event is reached, or until your trustees think it is appropriate for funds to be made over to the beneficiary.
In Scotland you are able to inherit from the age of 16 and, if your Will does not provide otherwise, or if you do not have a Will at all, the inheritance will be made over to the child or grandchild once the age of 16 is reached, regardless of how sensible or not they may be. This is why many of our clients prefer for the share of their estate passing to a child or grandchild to be held in a Trust until the child or grandchild reaches a certain age. The ages of 18, 21 and 25 tend to be the most popular.
Another example where trust provisions can be useful is for disabled beneficiaries. One reason for this is the beneficiary may lack the capacity to be able to deal with the inheritance appropriately and a Trust can provide the trustees with the ability to look after and invest the funds for the benefit of the disabled person. Another reason may be that any inheritance received by a disabled beneficiary can affect their eligibility for means tested benefits. A Trust can provide a way of ring-fencing assets so they are not taken into account in a disabled beneficiary’s financial assessment, with the Trustees having discretion as to how much and how often money is paid over to the vulnerable beneficiary.
Finally, it is not uncommon for clients to have a friend or family member who suffers from addiction problems who they worry will ‘blow’ their inheritance within a couple of months. Again, Trusts can be used as a useful means of controlling how much the person has access to at any one time by allowing the trustees to pay over funds to the person as and when they think it is appropriate to do so.
Very rarely are family situations straightforward and everyone’s circumstances are different which is why we provide specialist advice tailored to you to ensure your Will best reflects your circumstances. If you would like more information or to arrange an appointment with a member of our team please get in touch.