Blended families face unique financial and legal challenges, particularly when one or both partners have children from prior relationships. A discretionary family trust can offer a practical solution by providing flexibility in how assets are managed and distributed, especially in the event of death or separation. It ensures that both sides of the family are fairly considered, offering greater peace of mind for everyone involved.
Whether assets are held jointly or individually, there can be significant risks for the children of a deceased partner, as they will often have no standing to bring a claim against their stepparent’s estate under the Family Protection Act 1955 (meaning any recourse will become costly and uncertain to navigate). A discretionary family trust, however, allows for a more nuanced approach, ensuring that the needs of all children, whether biological or not, are considered.
Key benefits of utilising a discretionary family trust in a blended family scenario:
- Flexibility in asset distribution: the trustees have discretion over how assets are distributed, which allows for a fair assessment of the needs of all beneficiaries, including the surviving partner and children from both families.
- Protection for children: by placing assets in a trust, you can ensure that children from a prior relationship are provided for, even after the surviving partner’s death. This is particularly important should the surviving partner enter a new relationship.
- Impartial decision-making: an independent trustee can ensure that decisions are made fairly, based on the needs of all beneficiaries.
Furthermore, a Memorandum of Wishes from the settlors can offer valuable guidance for the trustees, although it’s important to recognise that the final decisions ultimately sit with the trustees. Establishing a clear understanding on these matters is much easier when all parties agree and can openly communicate their intentions.
Navigating the creation of a discretionary family trust can be complex, and professional legal advice can provide invaluable assistance. By working with a skilled legal team, you can structure a trust that ensures fair and equitable treatment for all parties involved.
If you are considering setting up a discretionary family trust for your blended family, we encourage you to reach out to our experienced legal team. We can guide you through the process, ensuring that your family’s unique needs are addressed with care and expertise.
