Should I close out a discretionary trust?

[hiriskpaul]

I am nearing the end point of the administration period of an estate from hell. Had I anticipated the difficulties I would have handed the whole lot over to a solicitor on day 1, but we live and learn.

I am waiting for the final nod from HMRC on the estate tax return. Following that I can distribute the rest of the estate. The final complication is that the will sets up a discretionary trust for my disabled cousin. The trust is called a "Family Trust" and not specifically for him (so not a disabled person trust), but that is the clear intention according to the letter that came with the will. Trusts are a pain to administer and are tax inefficient, so I am considering simply paying out the entire amount allocated to the trust to my cousin. It will be about £100k and my cousin does not at present want or need the money. I can then work the money into an ISA for him, which of course will deliver tax free returns, cost nothing to run and not require much admin.

My cousin receives benefits that are not means tested and will receive a full state pension in a few years time, again not means tested, so there is no issue with loss of benefits. He might end up having to receive care, which could of course rapidly eat through his inheritance, but he shows no sign of needing care at present.

So, if I were to go ahead with this plan, what do I need to consider to close down the trust? A trust that has not really been set up/funded yet. Also, are their any legal pitfalls I should be aware of?

Any thoughts on this would be welcome.