A trust is a fund that is set up by – you guessed it – trustees to manage the accounts of a person, or company, that is no longer in a position to do so.
But in this article, we’ll take a quick look at how you can set up a trust for one of your relatives, particularly if they suffer from advanced neurological conditions like Alzheimer’s disease or dementia.
Step one: Talk to your family
Setting up a trust is a pretty big move and is, in essence, a measure that will stop your relative from being able to have any control over their own finances.
Although this has large legal ramifications, one of the biggest effects we see is that families will often fall out over the more emotional side of creating a trust.
Who should manage it? Why do you want to do this? Is he/she really in that bad of a state that they need their affairs to be managed by us? All of these questions have hard answers, but must be faced up to if a reasonable solution is to be reached.
Everyone should be aware of why you think it is a good idea and be in no doubt as to your lack of ulterior motives for calling for a trust to be made. While it might seem unpleasant to say this, family disputes often arise over the handling of money and it is vital everyone is as transparent as possible in the process.
Step two: Talk to the person who you will be setting up a trust for
Although in many cases it will be difficult to tell the person you are setting up a trust for that you will be taking control of their finances, if done correctly, it can be presented as a samaritan-like move instead of an insult.
In many cases, due to the nature of trusteeship, the relative that you will actually be managing the money of might not be in a position to understand you anyway, as they may be suffering from a health problem that renders their cognitive faculties diminished.
If the person you are setting the trust up for is still aware of what is going on around them, then take the time to sit down and explain your decision, preferably alongside the family members that you will have talked to during step one.
While this might be heart breaking and will likely leave the beneficiary (a technical term for the person whose finances are being put under your control) feeling sad, in the long-term this is a good move that will provide peace of mind for all involved.
Step three: Talk to your wills solicitor
Once it has been finalised and everyone involved in the process has agreed that a trust should be set up, you should then talk to your family lawyer.
Our colleagues at Slater and Gordon have hundreds of years of combined experience and this will help get you through the process in an easy, painless manner.
Whereas going it alone has huge risks and could even render any trusteeship agreement null and void, simply hiring a lawyer or using an existing wills solicitor that you have used in the past will make it substantially simpler to get through all the paperwork and ensure everything is in place for a smooth transition.
The Money Advice Service, which is a division of the publicly run Financial Services Authority, recommends that Britons should hire a lawyer and via its website, the organisation explained: “The legal wording of a trust needs to be precise, so you should ask a solicitor to set it up.
“You have to choose people to be your trustees, usually family members or close friends who you know you can rely on. Think carefully about who to ask and make sure they’re happy to take on the responsibility. You should have at least two trustees, but probably no more than three or four.”
Step four: Consider counselling if this has affected you
Setting up a trust can be considered a relatively regular legal measure, but the fact that it will involve someone close to your heart no longer being able to take care of their money effectively means it can take a real emotional toll.
Feelings of sadness are not uncommon in this circumstance, especially if you are setting up a trust for a disabled child or someone that was recently involved in an accident.
If you experience depression, anxiety or any other worrying symptoms of stress like weight loss or insomnia because you are feeling overwhelmed by the legal process you have gone through, don’t hesitate to talk to your GP.
They will be able to point you in the direction of mental healthcare providers and popular options include talking therapies or antidepressant medication.
However, equally, if you don’t feel sad about setting up a trust you should not feel guilty, as everyone has a different reaction to these kinds of legal measures and some people even feel happy they have peace of mind about the beneficiary’s finances.
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Francesca Whitney is part of the marketing team at Slater & Gordon Lawyers.