Discretionary Trust - Investing

SevenOfNine · 30 September 2016 at 9:09AM

Not sure if anyone can answer this - will be meeting a solicitor shortly, just want an idea before then.

If a child has been left money in a Will, to be held in a Discretionary Trust with 2 trustees, in whose name do the trustees invest it?

Can it be in the trustees name/s, or must it specify 'in trust', or include the names of the children? There will obviously be supporting legal paperwork to show the money does not actually belong to the trustees, & HMRC will be notified accordingly that there is a trust set up so correct tax can be paid.

At the moment it's in my name in a notice savings a/c with a bank, once the Trust is legally in place can I leave it like that if I choose to?

dunstonh · 30 September 2016 at 9:32AM

If a child has been left money in a Will, to be held in a Discretionary Trust with 2 trustees, in whose name do the trustees invest it?

It will be something like "The Will Trust of child name".

A trust is a legal entity. Hence why it is in the name of the trust.

At the moment it's in my name in a notice savings a/c with a bank, once the Trust is legally in place can I leave it like that if I choose to?

What is it doing in your name? It is not your money. The executors should have made it payable to the trust.

SevenOfNine · 30 September 2016 at 10:17AM

dunstonh wrote: »

It will be something like "The Will Trust of child name".

A trust is a legal entity. Hence why it is in the name of the trust.

What is it doing in your name? It is not your money. The executors should have made it payable to the trust.

Our son died earlier this year. No wife or children (& no Will). As his parents, intestacy dropped it into our laps.

Our older son was left a lot of money via the pension & employers service benefit as a named beneficiary (which fell outside the scope of the estate), so we just want to transfer what we inherited to our grandsons (& we're all agreed on that). Everything would then have gone to the family members our late son would have undoubtedly wanted it to go.

We're setting up a Deed of Variation (not just 'gifting') & it will include a Discretionary Trust, we'll be meeting the STEP solicitor shortly.

It's really only in whose name we would then 'save' this money (which of course we already have, the estate has been wound up & the assets realised).

Initially we'll probably prefer to just keep it in the building society accounts (it's £100k so we've split it in half) while declaring it to HMRC as a Trust. Appreciate about diversifying the funds & maximising the investment but at the moment we cannot focus on all that stuff. Just need to simplify the place we currently have it lodged as much as possible.

Ideally I'd like to just stick it in a fixed term account (or two, to split it underneath the FSCS safety net), if that is at all possible, just while we are emotionally unable to deal with it in a more profitable way for our grandsons.

dunstonh · 30 September 2016 at 11:13AM

We're setting up a Deed of Variation (not just 'gifting') & it will include a Discretionary Trust, we'll be meeting the STEP solicitor shortly.

That explains why you have it then.

Initially we'll probably prefer to just keep it in the building society accounts (it's £100k so we've split it in half) while declaring it to HMRC as a Trust. Appreciate about diversifying the funds & maximising the investment but at the moment we cannot focus on all that stuff. Just need to simplify the place we currently have it lodged as much as possible.

It should be noted that the trustees have a legal responsibility to act in the best interest of the beneficiaries and also be seen to do that. Whilst I understand that you may not be up to it at this time, you do have a responsibility. It may be that additional trustees can be allocated or if you cant DIY then you use an IFA to arrange it (which covers doing what is best and being seen to do what is best).

Cash deposits are unlikely to be considered best unless it is short term before the child is to receive the money from the trust.

xylophone · 30 September 2016 at 1:07PM

The bank account (and any share accounts etc), will be in the names of

eg Thomas Smith, Mary Brown, Richard Jones, Trustees of the John White Discretionary Trust.

Make sure that you understand the taxation of a Discretionary Trust and that you keep up with any changes.

http://www.tolleytaxtutor.co.uk/taxtutor/files/subscriber/personal-tax/uk-trusts-and-estates/lectures/1d03.pdf

https://www.gov.uk/trusts-taxes/overview

Anecdotal evidence suggests that Banks are becoming less willing to open Trustee Bank accounts.

https://www.caterallen.co.uk/reserve-account-for-trusts may be worth a look.

dunstonh · 30 September 2016 at 3:48PM

Anecdotal evidence suggests that Banks are becoming less willing to open Trustee Bank accounts.

I would not be surprised since trusts now get hit under the US FATCA regulations. Although a £100k trust may find a home more likely than a £1k trust.

SevenOfNine · 30 September 2016 at 5:42PM

Thanks for links xylophone & advice re possible difficulty even opening a trustee account.

We'll do some checking with financial organisations & the solicitor before finalising the Discretionary Trust aspect. She might have some alternative suggestions.

Thank you both - a lot to sort out.

Yogamumma · 3 January 2017 at 4:26PM

Opening a trustee bank account isn't much of a problem, you just need an advisor who knows what they are doing! It's a basic bank account, both to sign, cheque book (no cards) in the name of the trust (and that depends on how the trust is set up). You will also need the trust document. I went to Nat West as its local. I believe Metro also can help . Now a savings account...... that's another matter!

Discretionary Trust - Investing

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free