Does a creditor have any rights/access to a Life Insurance once they have Judgment

[Toots111]

Hello Toots

 

According to Hayton & Mitchell: Commentary and Cases on the Law of Trusts and Equitable Remedies Thirteenth Edition, the interests of the beneficiaries are paramount and the irreducible core content of the trust concept consists of a duty of the trustee to act for the beneficiaries’ interest, without this, a trust would not exist at all.

 

Ownership of trust property is vested in the trustees (or their nominees, although the trustees technically then own an interest in the property owned by the nominees), to be managed and dealt with wholly for the benefit of the beneficiaries – Smith v Anderson (1880) 15 Ch.D. 247

 

Therefore, under the trust instrument, you are holding funds/assets in trust for the beneficiaries only and the trust falls outside of your Estate for IHT/Probate purposes and as such, no creditor can make any claim against the trust property.

 

You can relax on this issue now with peace of mind in the knowledge that your children will receive the whole benefit of the funds/assets due and owed to them in law under the trust created by you.

 

The above matters together with Steampower’s posts here should enable you to concentrate on the other “yukky” matters. I wish you a Merry Christmas & a Happy New Year.

 

Sadie

 

MANY THANKS SADIE,

 

I think our posts have just crossed in the ethers, so I hadn't read yours when I sent my last two. If you have another 5 minutes to spare, (but no worries if you don't), please could you respond to the final questions I've just sent to steampowered please? It's the post that starts off by calling him a star, which I will now add to you too!!

[SADIE DE RUE]

Hello again Toots

 

You do not need to name your creditor(s) as excluded persons under the trust, because the trust falls outside of your Estate and the legal rights of the beneficiaries thereunder cannot be infringed by any means.

 

In my opinion, there is no requirement for you to make any changes to the trust.

 

Sadie

[Toots111]

Hello again Toots

 

You do not need to name your creditor(s) as excluded persons under the trust, because the trust falls outside of your Estate and the legal rights of the beneficiaries thereunder cannot be infringed by any means.

 

In my opinion, there is no requirement for you to make any changes to the trust.

 

 

 

 

 

Sadie

 

Cheers Sadie, I'm so very grateful.

 

If steampowered picks up on the final couple of questions about my daughters being both Trustees and beneficiaries, (problem??), and also whether all 3 Trustees are required to make any amendments to beneficiaries, I'm home and dry !!

 

A very merry Christmas and a happy new year to you too Sadie. I'll remain very grateful to you,

 

Toots.

[steampowered]

Under 8.1, would it be necessary, or worth my doing, to add a clause to say that my creditors are excluded people please?

This is not necessary. If you read 8.1 closely, you will see that the concept of 'excluded persons' applies only to people who would/might/are/could become beneficiaries. Since the only beneficiaries are your daughters I don't think it is necessary to expressly exclude your creditors since they would never fall within that category.

 

The concept of 'excluded person' was traditionally used in family trusts. People would create a trust in favour of their children (i.e. all children would be beneficiaries) but would then try to exclude children who (for example) refused to go to university or indulged in substance abuse. It was traditionally an attempt by wealthy parents to control their offspring.

 

Under 7.3, if Trustees are there to act in the interests of the beneficiaries, is it/could it be, a problem that my two daughters are both Trustees and beneficiaries please? Should I have chosen somebody else to act as Trustees, instead of them? (Although I don't really have anybody else close enough to trust).

No, that's fine. Technically speaking, whenever you co-own a home with someone else, there is always a trust - the legal owners being the persons registered on the land registry for the beneficial owners (usually the same people) in proportion to their respective contributions towards the equity.

 

I've researched trusts so much over the past few days, ( maybe I should retrain as a solicitor now, although way too old unfortunately!!), and have repeatedly read that Discretionary Trusts allow Trustees to change beneficiaries. If that's correct, as I am the Settlor AND a Trustee, doesn't that mean that I have the power to make such changes, (in which case couldn't a creditor force me into adding them as a beneficiary?)? Or, would it need all 3 Trustees, myself and my daughters, to make any amendments to the beneficiaries please?

No, a discretionary trust only allows you to allocate entitlements between existing beneficiaries. It does not allow you to add new beneficiaries. You have to be a beneficiary first to get anything.

 

For example, if you set-up a discretionary trust in favour of your two children, the trustees can decide to give one child more than the other. Perhaps one child needs more money than the other for medical or education expenses. But the trustees cannot give the money to someone who is not your child.

[Toots111]

HUGE THANKS steampowered, that's all of my never-ending questions answered and I can finally put all the paperwork away and forget about it.

 

I can't tell you how grateful I am!

 

Have a lovely, peaceful Christmas and all the very best for the new year,

 

Toots. xx

[steampowered]

No worries, enjoy your Xmas!

[honeybee13]

No worries, enjoy your Xmas!

 

That sounds like a gold star for you, SP, well done.

 

Toots, if you haven't already, you might like to show your appreciation to SP by clicking on the star at the bottom left of one of their posts to leave a short message and add to their reputation.

 

Take care, HB