Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!



Trust Fund buy-ouy
Ellen Johnson
Posted: 16 December 2012 12:58:35(UTC)

Joined: 16/12/2012(UTC)
Posts: 1

I am to be offered a cash lump sum on a £100,000 life time income trust fund left to me by a realtive when when she died. What calcualtion will be used when offering me a lump sum by the end beneficiaries (i.e. when I die the £100,000 would have been returned to this beneficiary) the trust fund was set up to provide me with an income for life, but the offer of a lump sum now is more appropriate.

Is there some simple actuarial calculation that I can work on to see if what they offer me is near the mark. I am female and 50.

Kind regards.
Posted: 17 December 2012 00:21:15(UTC)

Joined: 09/03/2011(UTC)
Posts: 414

Thanks: 141 times
Was thanked: 523 time(s) in 209 post(s)

With limited information to go on, my initial reaction is that you need to be very careful before changing the terms of the Trust. The clearly-stated intention of your benefactor was "to provide me with an income for life". Is the "offer of a lump sum now...more appropriate" to you or to the eventual beneficiary of the £100,000? Who is making this offer? You or them? Your life expectancy in normal circumstances could easily be 35/40 years so one could understand that their motives in seeking to pay you off now are not entirely altruistic! A £100,000 annuity on the single life of a 50 year old woman would probably pay around £4,000 per annum. Depending what your £100,000 is invested in, I doubt it is producing much more than that. There is, therefore, an argument that you would need the lot to put you in the same position.

There may be all sorts of reasons why you would want to take less as a capital sum now - maybe you have other income or pension provision; maybe you have shortened life-expectancy, maybe you need capital for property purchase etc. - but if you waive your entitlement to an income for life and agree to accept a lesser sum, you will certainly end up poorer in the long run.

As the lifetime beneficiary of the Trust, you are in the driving seat. Please do not be talked into doing anything you really do not want to do or the longer-term implications of which you have not fully considered.
Derek Sturdy
Posted: 18 December 2012 23:08:32(UTC)

Joined: 08/03/2012(UTC)
Posts: 4

Was thanked: 9 time(s) in 2 post(s)
The one thing a beneficiary normally has is the right to know exactly what are the terms of the Trust and what the assets are - you may not have many rights, but you do have those. Nobody can deny you those rights, so you should find out both those things, if you have not already done so. If you meet obstruction, you should immediately suspect that something is not right, and be on your guard.

When you know what the total Trust assets are, and the Trust terms, you will be in a much better position to assess whether a "lump sum offer" looks attractive, reasonable, or otherwise, and why any such offer has been made in the first place. Only then can you assess whether you should even consider such an "offer", let alone accept it.

You need a proper lawyer, who understands Trusts and settlements - and, dare I say, such people are not to be found in every small town. Good legal advice is expensive, but it is worth it every time - there's nothing more expensive than a cheap lawyer.

Good luck.
Posted: 20 December 2012 22:49:52(UTC)

Joined: 07/10/2012(UTC)
Posts: 27

Thanks: 5 times
Was thanked: 11 time(s) in 9 post(s)
It is easy to say that all your advice should come from lawyers/advisors.
I would ask:
How do you feel about the end beneficiary, (who may or may noy be a relative). Is this person also taking legal advice? Is this a person whom you have a reasonable relationship with? Do you trust them?
In the final analysis you should not accept anything which makes you poorer, and I don't see why you should pay a lawyer to tell that you would need the full £100,000 to place you in the same position. After all, if you had a £100,000 of your own money invested for income, and used this to live on until you died, you couldn't take it with you, and it would then go to someone else, just as this trust fund will.
In my very very humble opinion, I think this may be about relationships.
If you want to do the end beneficiary a favour then do a deal that you feel comfortable with but recognise you will be relinquishing some benefits. If you want to have the maximum benefit from the trustfund keep the income.


+ Reply to discussion


Other markets