First, all due respect, if you're talking 2% returns and £50k/year for management, then you should recognize your own limitations: your own knowledge of money has its limits, and that is relevant because there are lots of strategies available that are beyond your experience. Of course, that is a very hard thing to hear, because money habits are deeply ingrained psychologically.

How endowments work

The idea of having a lump-sum support your brother is very solid. It's not far from an endowment - which is a funding strategy used by universities and other not-for-dividend entities. An endowment is a pile of money that makes money. The "made money" is reinvested into the endowment (as a hedge against bad years and inflation), and a prudent amount of 4-7% is drawn off to fund projects. The investment strategy closely scrutinized by experts, and must adhere to a reliable standard.

Endowments take advantage of the fact that the scary thing about stock investing is actually volatility, the tendency to go up and down abruptly in the short term. In the long term, markets always go up at a very healthy pace. And that is typical: investments with the highest average growth also have the highest volatility. An endowment manager doesn't care about volatility because she's playing a LONG game. Not only can she be in stocks, she must be by law, because that's where the growth is. Allowing an endowment to rot away in a 2% bond would get her dragged in front of a magistrate.

An endowment is investing for a "some back every year, forever" whilst a trust serves a person with a finite lifespan - so it's not quite the same. It's prudent to start backing out of the volatile stock market as the person gets old enough that the market wouldn't have time to recover from a downturn before the money is needed. Or, the fund could be managed as a "forever fund", and simply assigned to their children.

If you read Pride and Prejudice, and hear about how Mr. Darcy was a "man of 20,000 pounds a year", that's more or less how that worked. The "endowment" wasn't generally traded stocks like today, it was other holdings; but the point is that "endowment" is owned by the family, he inherited it, and he will pass it on to their progeny.

Set up a trust - but it's an arms race

I discussed the endowment so you can have a foundation of what to expect from a trust. Since it serves a financially irresponsible person, the financial engine is similar, but the wrapper must be somewhat different.

First and foremost, it must be protected against squandering. I hardly need to tell you not to give him access to the lump-sum. However, beneficiaries want to spend. They tend to view themselves as the "victim" of a trust, and they really want to bust the trust and get to the underlying lump sum. Discouraging the stupid from busting their trusts, is precisely where the "Fable of the Goose that lays Golden Eggs" came from.

Your brother will likely be actively solicited by winklers (best word I can think of) who will pay a lump-sum to buy the rights to his future trust income. He is then free to squander the lump-sum. This is exactly the fate of many lottery winners who try to protect themselves by selecting a yearly annuity - the linked book was written by a former winkler. Yikes. The trustee is then obliged to make the check out to the winkler, and the brother gets nothing. It's like an anti-endowment that cancels out the endowment, except it's extremely inefficient, with the winkler collecting as much as 85% of the value because they tricked the brother. (thanks CodesInChaos).

For instance, one potential way is for the trustee to have the legal right to suspend or cancel payments at any time. Now, since the payments aren't guaranteed, the winkler won't do business with your brother, because the winkler would know the trustee would stop payments rather than let the winkler have them.

Here's my point.

This area of law is an arms race between lawyers working for trustees and lawyers working for winklers and angry beneficiaries trying to bust the trust. You need to find a lawyer who is very practiced in this particular area, and is "up to speed" on all the strategies used by both sides. That way he can b so you can build the best defense into the trust. This won't be an annual expense (much), but it will be a one-time expense.