The Bank of Nan and Grandad – why discretionary trust Wills may be worth thinking about
While the discussions around this subject seem to have focussed on the financial aspects of passing on wealth and why younger generations need it, there are other key factors to consider - such as family dynamics, the strength of relationships, anticipating present and future needs, predicting how wise or reckless youth will be in future, expressing love and care, and trusting others (such as a child or children) to take on the mantle of using/distributing your wealth in the future.
Making a Will with outright gifts has its challenges because what you decide today about who should inherit may well change in future. Your children may be financially secure now, so that you can leave everything to your grandchildren, but they may not be in the future. You may have a wayward child or grandchild that matures, or you may reconcile with family members that you are distant from now. A grandchild’s inheritance may be at risk if they are going through a bankruptcy when they inherit, or if they are about to divorce.
A solution to this may be making a discretionary trust Will. The Will states who can benefit from your wealth and your Trustees’ decide who inherits and how they inherit. You choose Trustees that you trust and know will follow the detailed guidance and wishes that you will give to them.
Your Trustees could manage money or accommodation for a wayward child, decide whether your children are wealthy enough so that your grandchildren should inherit instead, or decide to hold funds back from a grandchild until they have gone through a bankruptcy or divorce.
A discretionary trust Will is potentially a Will for life. You may never need to make another Will because you can update the guidance to your Trustees whenever you wish without changing the Will itself.