Peter, Joanne & Jonathan

Peter and Joanne had set their trust up 15 years ago. The trust owned their home, bach and shares in their family run business. Peter and Joanne had four children, three of whom worked in the business. These three children were all married or in long term relationships and had children of their own. Their youngest son, Jonathan had gone down a different path to the other children. Having been easily influenced by his peers from an early age, he sadly had had various issues with drugs and alcohol over the years and was now estranged from Peter and Joanne, despite their attempts to help him rehabilitate.
Peter and Joanne were particularly concerned that if they died, any money passed on to Jonathan would be carefully managed so that he wouldn’t get any lump sums, but that his needs would be provided for. They were concerned that any large sums of money would be used on drugs. They knew that this would be potentially life threatening for Jonathan. They went to their lawyer to see what they could do to make sure that their wishes in respect of Jonathan would be recorded and respected.
Their lawyer recommended that they put in place a memorandum of guidance for the trustees with a lot of detail in it relating to how Jonathan’s share of the trust assets were to be used for his benefit if both Peter and Joanne died. The lawyer explained that this is a document which needs to be continuously reviewed and that if Jonathan’s circumstances changed, then the instructions to the trustees may change too.
Peter and Joanne thought that it might be useful for their other children to become trustees if they both died. Their lawyer cautioned them to think about this carefully, as this could be quite a burden on the other children, and could further damage the relationship between the older children and Jonathan. He suggested that retaining a professional trustee would be useful in the circumstances, as a professional is able to look at things more objectively and takes the emotion out of decision making.
Trusts are a very useful tool for asset protection, and sometimes that protection is actually about protecting beneficiaries from themselves. The memorandum of guidance is such a useful document, and it is so important that if you have a trust, your memorandum is tailor made for your circumstances.


Issue 100 July 2019