Discretionary Trusts and Last Powers of Attorney Lasting Powers Of Attorney You may wish to make a lasting power of attorney to appoint a person or persons to help you, or to make, decisions on your behalf. Or you an ask your professional adviser to arrange it for your family member with autism, epilepsy or a significant physical disability. There are two types: Health and welfare lasting power of attorney You can use this LPA to give an attorney the power to make decisions about things like: your daily routine, for example washing, dressing, eating medical care moving into a care home life-sustaining treatment It can only be used when you’re unable to make your own decisions. Property and financial affairs lasting power of attorney Use this LPA to give an attorney the power to make decisions about money and property for you, for example: managing a bank or building society account paying bills collecting benefits or a pension selling your home Please note the above advice only applies to England and Wales. Discretionary Trusts A discretionary trust is a legal arrangement which allows you to set aside assets, such as property and money, for the benefit of people you choose as ‘beneficiaries’ and the trust is controlled by trustees whom you appoint. In the event of your death, the trustees have a legal responsibility to use the trust fund to benefit the chosen beneficiaries – which can be family members (or other individuals) or a charity. Why discretionary trusts are important If you are caring for someone who can’t lead a fully independent life you might be worried about how they are cared for after you die. By setting up a discretionary trust, the money from this will be used to care for your family member as your appointed trustees will act in their best interests and benefits. Importantly, having money in a trust fund allows the trustees to have quick access to the funds and they can start paying for care immediately after your death. Leaving money directly to your family member in the form of a gift in your will can affect any benefits they are entitled to from the State, a discretionary trust ensures that your family member is mean tested benefits are not affected as they do not have a defined share in the trust and cannot be said to own any part of it. Depending on the type of trust you use, there may also be tax implications after your death. You should discuss this with your solicitor. Choosing your trustees Trustees can be professionals, such as solicitors or accountants who will charge for their services, or they could be friends of family members. It is advisable to have more than one trustee, but not more than four as trustees will need to meet and agree on all decisions. Making a discretionary trust A discretionary trust is a legal arrangement and you should ask your solicitor to produce it for you. The rates charged by different solicitors for this type of service may vary, although it usually costs between £200-£500. The Law Society has a list of all solicitors in the UK and the areas they specialise in. Disabled person’s trust You may also consider setting up a disabled person’s trust if your family member meets the conditions to qualify for this type of trust, for example, if they receive the disability living allowance care component at the middle or higher rate. Your family member will be entitled to all of the income from the trust and will not affect means-tested benefits, unless the trust fund produces a lot of income and your child has more money than they can use. Which type of trust is right for me? Your solicitor will be able to explain both types of trusts and to guide you to make the right choice for your circumstances and for those of your loved one. Can I have a sole beneficiary of a discretionary trust? You need to have a group of beneficiaries for a discretionary trust but if your family member qualifies for a disabled person’s trust they can be the sole beneficiary. For your discretionary trust, you could include other family members, such as nieces or nephews, or your favourite charities such as Support Dogs to make sure you have a large enough group of potential beneficiaries. You can leave instructions in your letter of wishes to state, for example, that during the lifetime of your family member, the trustees put the his or her needs first and benefit the other beneficiaries later. Can I include Support Dogs as one of the discretionary beneficiaries? Yes, and we are always grateful to be considered in this way. We would expect to receive any benefit until after the death of the beneficiary. What happens to the trust after the death of the beneficiary? You get to decide what happens. You can, for example, direct that your trustees split any money left over equally between the other beneficiaries that are still alive. Or you can give any balance to charity it is completely up to you. Letter of Wishes A Letter of Wishes is a document that accompanies your Will. It is not legally binding but can guide your executors and trustees to ensure your personal wishes are carried out. You must take care that a Letter of Wishes does not contain anything that could conflict with the Will. The Letter can advise on anything but most common uses include: Any charities you would like to benefit (giving the Executors the final choice of fulfilling your wish, or not, depending on whether there are enough assets for other beneficiaries. Who to notify of your death, or in some cases, who not to tell. The style of funeral you want, whether you want burial or cremation, and any specific instructions regarding the service, where you would like to be buried or have your ashes sprinkled. Guiding your executors or trustees on how you would like any money managed, or trusts created in your Will to be run. Appointing guardians for your children and how you would like your children to be raised, their upbringing, education, and where they live. These details should be reviewed as the children grow up. Giving more detailed information to help your executors identify specific items you are giving away in your Will. Providing explanations as to why you have excluded someone from the Will, if you think that it may be a controversial decision or challenged later. A Letter of Wishes should be written in plain English, signed and dated, but not witnessed to avoid any claim that it has become a legal Will or codicil. This document is suitable for people who live in England, Wales, Northern Ireland and Scotland. Legal disclaimer This information is guidance, not legal advice. Always contact a solicitor or legal professional before including a trust in your will.