Trusts and Vulnerable Beneficiaries

“I’m worried about one of the beneficiaries of my Will”.

We are often asked “What’s the best way to provide for a beneficiary with a vulnerability in a Will?” The answer is – it depends. Vulnerability can be as a result of an inability to manage money due to a spendthrift personality, a disability, or a potential bankruptcy or family law dispute.

“The best strategy always depends on the situation – using the correct legal safeguards protects those who are more vulnerable” advises Trent McGregor, Wills and Estates Solicitor.

In many cases, a form of trust is appropriate. As Trent explains, “A trust is a way of leaving assets in the care of one person – known as the trustee – for the benefit of others – known as beneficiaries. The person managing the assets must always act in the beneficiary’s best interests, and must also follow any ‘rules’ set out in the trust itself”.

For example, these ‘rules’ might dictate that assets can’t be sold and a beneficiary can only receive an income until the threat of bankruptcy or family law separation has passed. A spendthrift beneficiary might be required to achieve certain savings goals before funds can be released.

Trent advises that there are many different types of trusts that can be tailored to suit your individual circumstances.  For example, discretionary trusts are fully flexible, allowing the beneficiary to keep their inheritance separate from their personal accounts or to make tax effective distributions to minor beneficiaries.

A special disability trust can be established for a person who is receiving the disability support pension and as Trent explains, up to $657,000 can be kept in trust without their pension being affected. This makes special disability trusts a useful tool for parents and grandparents who want to make sure their loved ones are looked after.

For advice and assistance with making a will or setting up a trust, phone Trent or a member of the Wills and Estates legal team at Robertson Hyetts Solicitors on 5434 6666 or 5472 1588 for an appointment.