Recently, singer Sting has made headlines by claiming he will not be leaving any of his vast wealth to his children. When planning ahead, many individuals choose not to leave their wealth to their offspring. This decision can be for a variety of reasons, for example personal disputes, their children’s own thriving financial status or merely a change in priorities. There are various ways in which to limit the amount of inheritance a child can receive through the creation of a trust, which in essence works to benefit individuals without providing them with an absolute right to the funds.
Interest in possession trusts
Interest in possession trusts provide for individuals for only a set period of time. An individual can create an interest in possession trust that allows their child to have access to the income of the trust but also provides instructions as to disposal of the actual funds. For example they could choose to make their children the ‘life tenants’ – entitled to the income of the trust – and their grandchildren, or other individuals, the ‘remaindermen’ – entitled to the trust capital.
Discretionary trusts are different to interest in possession trusts in that they provide trustees with greater power to allow children certain capital as and when they think fit. The trustees will be able to judge what portion of the funds they wish to pay, to which beneficiary and how frequently. Discretionary trusts are best used when the trustees can be trusted implicitly to judge when to pay the beneficiaries.
While these may be the best methods to restrict the amount of inheritance a child receives after the passing of their parents, children may still be able claim that they have not been reasonably provided for, under the Inheritance (Provision for Family and Dependants) Act 1975.
Our friendly team at Aston Bond can assist clients across England and Wales with wills and probate. For more information please call us on 01753 486 777 or email email@example.com. Alternatively, you can visit our new offices at 7 Windsor Road, Slough, Berkshire, SL1 2DX.
Amarjit Awal- Litigation Paralegal