How Netflix got me thinking about trusts

It’s not often you put a Netflix series on and end up thinking about your job, especially when your job involves advising on trusts. Yet, this is precisely what UK true-crime documentary The Puppet Master made me do.

Netflix’s The Puppet Master tells the stories of the victims of criminal mastermind and manipulator, Robert Hendy-Freegard. Freegard successfully manipulated millions of pounds from his victims through his elaborate and convincing lies. Whilst the documentary focuses on his heinous actions, it made me think of the many misconceptions about trusts and how they could have potentially protected assets from Freegard.

Misconceptions

Complex, expensive, unnecessary: all reasons frequently quoted to deter people from establishing trusts or continuing with them. Although trusts can have an administrative burden, they can often be the best option for catering to a client’s needs and addressing their concerns.

There is a huge misconception, fuelled by the media and programmes like Gossip Girl and Inventing Anna, that trust funds are just for the wealthy. Such shows often feature young adults with huge trust funds (that span generations and are filled with endless amounts of “old money”) used to fulfil their lavish lifestyles, or havens to shield assets from taxation or other parties that should justly be paid. It’s not that these kinds of trusts and arrangements don’t exist, but they are a million miles away from the circumstances of most clients!

Our estate planning largely involves wills that direct assets to a form of discretionary trust. Clients are often shocked that this won’t magically save all the Inheritance Tax they’re currently due to pay when they die (although it could minimise it down the generations!). The right lifetime planning could help save on Inheritance Tax, but a discretionary trust that receives assets via a will is not immediately the way. However, these trusts can offer a multitude of other benefits, often making them the most attractive option.

Discretionary trusts – more than just tax planning!

Beneficiaries of a discretionary trust do not have a right to assets within the trust, and whilst this can sound concerning, it means that the assets that comprise the trust fund are as protected as far as possible from the individual circumstances of the beneficiaries. It is these protective benefits that are often overlooked.

Discretionary trusts can ensure that the assets are used for the benefit of the intended beneficiaries, as opposed to being lost as a result of an unexpected circumstance suffered by a beneficiary. This could be remarriage, divorce, bankruptcy, long-term care, financial mismanagement, the vulnerability of a beneficiary, or, in the case of The Puppet Master, the victim of manipulation by a fraudster.

The Puppet Master follows the story of Sandra Clifton, Freeguard’s current partner and, to her children Sophie and Jake Clifton, his latest victim. Their story demonstrates how putting assets in the hands of individuals can compromise who ultimately benefits from an inheritance.

Jake Clifton explains: “After the death of both of my grandparents, my mum stood to inherit a house worth £300,000. My plan for this property was for it to be kept in trust with me and my sister as I feared that Freegard may get his hands on it, but a few months after… she took me to court. Throughout the court case, my mum wholeheartedly believed that I was stealing the money, but I was just trying to protect it for her. The judge, although he seemed to be siding with me, legally, he had to hand it over to my mum.”

Did Sophie and Jakes’ grandparents intend Freegard to be the beneficiary of their estates? I would hazard a guess that the answer is no.

Jake had the right idea; he wanted to establish a trust to protect the property. He was concerned about his mum’s current situation. If she inherited the property absolutely, Freegard might become the ultimate beneficiary and she might not benefit at all. The unfortunate issue is that it appears Jake wasn’t legally entitled to settle the property into trust. Had his grandparents left their estates to discretionary trusts, the story could have been much different.

Trusts are more than just tax planning. They can be effective tools to protect assets, ensuring that they don’t end up in the wrong hands and that the beneficiaries’ circumstances can be considered at the appropriate time. These are some of the many reasons we at CTT Group are advocates of discretionary trusts.

If you happen to watch Netflix’s The Puppet Master, you will hopefully see the benefits a discretionary trust could have added to this situation. Perhaps you’ll consider the benefits to your own situation.

Let us know your thoughts or if you’re looking to set up your own trust, get in touch with one of our team to take the next step.