One in four of us will be affected by mental health problems in any given year.
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Shocking recent statistics* show that one in four of us will be affected by a mental health problem in any given year. With this in mind, leading South West solicitors firm, Pardoes, is urging people to look at the benefits of trusts, as it is becoming increasingly more important to ensure vulnerable family members are well cared for.
Cheryl Farnham, the newly appointed trust manager at Pardoes, advises, "A discretionary trust is a very helpful tool as it can be used to shelter assets, which could include property, cash or investments, for a family member affected by mental illness. It is a highly flexible vehicle, where trustees are made responsible for the interests of the principal beneficiary throughout their lifetime.
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"In our experience, when a family member is appointed as trustee they may feel holding the 'purse strings' affects their relationship with the principal beneficiary. In these circumstances we wholeheartedly recommend using the services of a professional trustee, who is entirely impartial, and takes the brunt of any decisions made. Specifically regarding requests for distributions out of the trust – this leads to happier relationships for all involved."
A discretionary trust means that the trustees hold discretion as to how much is paid out of the trust and to whom, thereby ensuring that means-tested benefits are preserved for the principal beneficiary.
Similarly, discretionary trusts have several tax advantages, particularly where they are non or basic rate taxpayers, which means the beneficiary can reclaim all or some of the income tax paid by trustees on distributions from the trust. Furthermore, the trust assets do not form part of the beneficiary's estate on death for inheritance tax purposes.
A trust can run for a period of up to 125 years and can protect the family wealth for a wide selection of beneficiaries over the generations. It can be set up during your lifetime or by Will and should only be created upon obtaining professional advice.