Wills, Trust and Estate Planning for People with Intellectual ...

Introduction to Wills and Trusts at Co-Action West Cork AGM in Clonakilty

I was invited to speak at the Co-Action West Cork AGM in Clonakilty last night on the question of wills and trust and future planning for people with intellectual disabilities and autism.

It was my first time getting first hand experience of the excellent work done by this organisation and I was really impressed by the stories of the clients of Co-Action and their families that we heard throughout the night. ?Great credit must go to the dedicated staff, officers, volunteers, parents and families who make everything in that organisation happen in times of economic cutbacks on every front.

Succession planning for parents of children with disabilities is a very large topic and the AGM last night had a very full agenda. ?Therefore, it was only possible to scratch the surface and give a very basic introduction at last night?s event. ?My main theme was one of my regular ones: no matter what else, if ?you haven?t got a will stop thinking about it or talking about it, do it and make one now. ?If you have made a will but it?s long since out of date, update it and make sure it covers what you (and the people you care about) really need.

We decided that if there was sufficient interest we would organise a future seminar for parents of Co-Action clients dedicated to this topic. ?There was a sign in sheet for parents there on the night, but if you weren?t able to make it and you would like to be notified of any future seminars on wills and trusts or would like to receive more information, please subscribe to our mailing list below and I?ll keep you posted.

I would like to thanks Emma Smith and Maurice Walsh of Co-Action for inviting me to speak at the AGM.

I have put the text on which my presentation was based below.

Introduction to Wills, Trusts and Future Planning for People with Intellectual Disabilities/Autism

Co-Action AGM, O?Donovan?s Hotel, Clonakilty, Tuestday 8th May 2012, 8.00pm

I was very honoured to be asked here to speak to you this evening by Maurice and Emma. I know you have a busy AGM and I won?t keep you long. In arranging this talk Emma and I agreed that the best thing to do would be to arrange a dedicated evening seminar to deal with the topic in a bit more detail in the coming months, as we don?t have time to get into it this evening. So, we will pass around a sheet and if you would be interested in more information, please put down your name and e-mail address and we?ll keep you posted on when we arrange the seminar.

I?ve been thinking about wills a lot lately, it?s an occupational hazard. But wills are things that people don?t want to think about. It?s morbid, nobody wants to think about what happens when we die and it?s a subject people don?t often want to listen to someone speak about. I don?t get asked to do this often, and it?s not surprising really; nobody wants the grim reaper as an after dinner speaker!

But I don?t think of making wills as being about death. We don?t have any control over whether we are going to die and we have very little control over when we will die. However, we do have a lot of control over what happens to our stuff and the people we care about when we die. Now I don?t know about you, but I find things that I don?t have control over can be some of the most stressful things in life and sources of great anxiety for me. Therefore, when there are things that we do have control over, I believe that we should (and indeed that we have a responsibility to) take action and take that control.

If something is there as a source of anxiety; in there in the back of your mind: it keeps coming back to the surface. Perhaps not all the time but every so often in a quiet moment it pops into your head; you can?t do anything about it and you start worrying about it. By making a will you take one of those anxieties and you deal with it. It?s gone as something to worry about and it frees you up to get on with enjoying your life in that all important period between now and the day the will is read.

So taking action is essential and doing something is infinitely better than doing nothing. Making a will is the first step. But when you are caring for people with disabilities or autism, a will on its own may not be enough. In your will you will need a trust. And in this context, there are effectively three types of trusts. Now I said I won?t bore you with technical details this evening, but I will explain briefly what I am talking about.

The first type of trust is a bare trust. One person, call a trustee, holds assets or property on trust for another person or group of people call the beneficiaries. The ownership is fixed. The beneficiaries are the people entitled to the assets of the trust in shares that have been fixed by the person who created the trust either equally or unequally. The trustee has no control over how the trust fund is divided, he or she is simply there to see that it is done properly in accordance with the provisions of the trust.

The second type of trust is a discretionary trust. In a discretionary trust there are no beneficiaries at the outset. The trust is set up in such a way that a defined group of people, called the objects, are the only people who can benefit from the trust. They are potential beneficiaries, but they do not receive anything unless and until the trustees exercise their discretion in their favour. In a discretionary trust, the assets placed in the trust are suspended in the trust until the trustees appoint or pay out the assets in favour of one of the objects at which point they become a beneficiary.

The third type of trust is a hybrid of the first two types and is conversion trust. This is a discretionary trust which converts to a fixed trust at a given point in time or on the occurrence of a certain event, such as when all the potential beneficiaries reach a certain age.

For the purposes of what we are talking about this evening, in my view by far the most suitable trust is the discretionary trust. And while the concept of a trust is a very simple one, the execution can become technical and complex and has to be planned and put in place carefully. While doing something about it will nearly always be better than doing nothing, a badly set up trust can store up significant problems down the line.

One example of the advantages of a discretionary trust that immediately strikes you in this context is the area of social welfare entitlements. A significant bequest to a beneficiary which arises automatically because someone hasn?t? made a will or because a will gives a beneficiary an entitlement in absolute terms whether through a trust or otherwise, will be an asset in the name of that beneficiary for the purposes of a means test. This can result in a beneficiary losing out on means tested entitlements such as medical cards or other allowances when the benefits received are not sufficient to replace what has been lost.

However, a person named as an object in a discretionary trust has not taken any benefit and does not have any interest in the assets forming part of the trust unless it is given to them by the trustees. A trustee of a discretionary trust can manage the trust fund to ensure that the beneficiary receives what he or she requires on an on-going basis but is never in receipt of substantial assets or payments that might interfere with other entitlements.

On a cautionary note, I should mention that discretionary trusts can be subject to discretionary trust tax. In fact discretionary trusts are also used for tax planning purposes because of their flexible nature. There is an exemption from discretionary trust tax where the potential beneficiary is unable to look after their own affairs. But this exemption can easily be lost if the trust is not established correctly and if other potential beneficiaries are also capable of participating in the trust fund.

When we consider the flexible nature of discretionary trusts, what you are really talking about is putting something in place that has the capacity to adapt to future circumstances as you yourself might have done. And in this context the role of trustee is critically important. The people you appoint as trustees have to be people who you can trust to deal with the unforeseen eventualities that the future may hold.

But if the trust is set up correctly they will not be alone in doing this. You will have provided them with a letter of wishes, which though not legally binding will be very helpful and influential in their future decision making. In fact, in talking with Emma and Maurice in preparing for this evening I became aware of the excellent advocacy work that Co-Action is doing on behalf of clients. The role of trustees and the letters of wishes to be written to trustees could learn a lot from this advocacy and could incorporate provisions to consult with advocates in making decisions in the future.

In selecting trustees careful consideration has to be given to the potential for future conflicts of interest. The job of a trustee can be difficult enough without having to balance their own interests in the equation. A conflict of interest can arise by default if a trustee is a family member who stands to benefit when the trust is eventually wound up. The potentials for conflicts of interest needs to be managed sensitively but decisively when selecting trustees and structuring a trust, in order to avoid problems in later years.

So, in summary, if you haven?t got a will make one now, if you have a will review it to make sure it provides those that will come after you with security. But don?t put off the task or approach it as something that you?ve got to do in contemplation of death, do it as something that will give you the peace of mind to live your life to the full in meantime.

I have only been able to scratch the surface of this area in this short presentation and I do not wish to bore you in your busy AGM this evening. So if this is something you would have an interest in learning more about or attending a dedicated seminar on this subject, please put your name and e-mail address on the sheet we are passing around and give it back to Emma and we will get in touch as soon as we organise future events.

Thank you for listening.

If you didn?t get a chance to put your name on the list at the AGM but you would be interested in being notified of future seminars or receiving further information, please subscribing to our mailing list below.

Florence McCarthy LLM, CTA, TEP is managing partner in McCarthy & Co., Solicitors Clonakilty. As well as being a qualified solicitor with over 15 years? experience he is a registered Chartered Tax Adviser with the Institute of Taxation in Ireland and a registered Trust and Estate Practitioner with the London based Society of Trust and Estate Practitioners. He specialises in the areas of trust, estate and succession planning and commercial law.

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