A Bereaved Minor’s Trust (BMT) is established to provide for children who have lost one or both parents. While designed to offer long-term financial security, circumstances may arise where early termination or revocation of the trust becomes necessary or desirable.
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Circumstances for Early Termination or Revocation:
- Agreement of all Beneficiaries and Trustees:
– If all beneficiaries are of legal age and capacity, and all trustees agree, the trust can be terminated.
– This requires careful consideration of the potential tax implications and ensuring the best interests of the beneficiaries are upheld.
- Court Order:
– The court may order the termination of a BMT in certain circumstances.
– This typically requires demonstrating a compelling reason and that termination is in the best interests of the beneficiary.
– Grounds for court-ordered termination may include:
Beneficiary’s best interests: For example, if the beneficiary faces unforeseen financial hardship and immediate access to the trust funds is deemed crucial.
Administrative difficulties: If the trust is proving difficult or costly to administer, and termination would be more efficient.
Changed circumstances: Significant changes in the beneficiary’s circumstances or the trust assets may warrant termination.
Key Considerations for Termination or Revocation:
- Beneficiary’s Best Interests: The paramount consideration is always the best interests of the beneficiary.
- Tax Implications: Terminating a trust can have significant tax implications. Capital Gains Tax (CGT) may be payable on any gains made on the trust assets.
- Legal and Financial Advice: Seeking professional advice from experienced solicitors and financial advisors is crucial. They can:
– Assess the feasibility and implications of termination.
– Advise on the necessary legal procedures.
– Help minimise potential tax liabilities.
– Ensure the process is conducted in accordance with legal requirements.
Alternative Options:
- Trust Variation: Instead of complete termination, it may be possible to vary the terms of the trust to better suit the changing needs of the beneficiary. This could involve:
– Extending or shortening the trust term.
– Modifying the distribution rules.
– Changing the investment strategy.
- Partial Distributions: In some cases, it may be possible to make partial distributions from the trust to the beneficiary while maintaining the overall trust structure.
How we can help
We have a proven track-record of helping clients create Trusts. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Wills and Probate Solicitors
It is important for you to be well informed about the issues and possible implications of creating a Trust. However, expert legal support is crucial in terms of ensuring your wishes are met as you would want them to be.
To speak to our Wills and Probate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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