Once the Guardian is appointed, attention to preparing the finances is required. The sensible solution is to create a Trust, which provides the Trustees with the power to accumulate income from the trust fund and apply it for the education, maintenance or benefit of the child. When the child reaches eighteen years of age there is the flexibility to release the funds (capital) to the child, or allow them to receive the income directly but not the capital, or continue under the same terms until the child reaches, say twenty-one or twenty-five years old.
The fund consists of the net assets from the estate of parents, which in most cases the parents will want their children to inherit directly. This is fine, but children cannot inherit directly until they reach eighteen years of age. In these situations, the Trust allows the child to benefit whilst it is under the control of a responsible Trustee. The Trustees invest the estate to create income or interest, which is available for the child’s benefit.
The amount of income depends on the size of the estate; however, with the help of a financial expert, additional funds might be available through life insurance.
It is important to nominate Trustees who can manage these tasks. There is at least one recent case where the Trustee misappropriated the funds. Follow the link Trustee steals £50,000 from child’s fund for a real horror story.
By considering and preparing a well constructed valid Will, young parents can ensure their children are looked after emotionally and financially in the event of a tragedy. Of course most of the time tragedies do not occur, thankfully. However, if they do and the Will has been carefully prepared, there is less stress and anguish to deal with.
Hay Tarn works closely with clients to prepare Wills for such circumstances.
Visit http://www.haytarnwills.co.uk/ for details.