Rather than giving money to your children directly, you may choose for a variety of good reasons to provide for them by way of a discretionary trust. Such a step is a serious matter, however, and as a High Court case underlined, it is extremely difficult to alter a trust deed after it has been formally executed.
The case concerned a father who wished to make provision for his three children from an inheritance of about £450,000 that he had received from his mother. He signed a deed that varied the terms of his mother’s will. As drafted, the deed placed all of his inheritance into a trust for the benefit of his children. The deed having been duly executed, he could neither cancel nor amend it.
The father launched proceedings seeking rectification of the deed on the basis that it did not reflect his true wishes. He said that his intention was that he and his wife would be included with their children as beneficiaries of the trust.
Ruling on the matter, the Court found that his instructions concerning the deed had not been correctly recorded. As a result, his name and that of his wife had been omitted from the list of beneficiaries. Regardless of where responsibility, if any, for that omission lay, the deed did not implement his intentions.
The Court found that the father wished to earmark £100,000 for the benefit of each of the three children and the remaining £150,000 for the benefit of himself and his wife. He wanted to create a discretionary trust so that the children’s access to funds would be controlled by trustees. One of the children was disabled and the trust was also designed to safeguard his access to state benefits. The Court exercised its discretion to rectify the deed so that it gave effect to those intentions.
Source: Concious