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  • FIRST POST
    • Peeweeontour
    • By Peeweeontour 13th Feb 18, 10:30 AM
    • 24Posts
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    Peeweeontour
    Trustee
    • #1
    • 13th Feb 18, 10:30 AM
    Trustee 13th Feb 18 at 10:30 AM
    Can anyone advise on how I would do the following.

    My father recently died and appointment myself and brother as executors. He left 1/3rd of his estate to our children - we are to act as trustees to this money (not a huge amount - around £40k) so I don't really want to involve a financial advisor as from what I have read its not enough money to make it worthwhile.

    I would like to open up some tracker funds to invest the money in, until they turn 18. We have 3 children between us currently, however my brother has twins due in June.

    The money is currently sat with the solicitors. They have advised that we need to open a trustee account. Would we open 1 per child? Do I need to open this with a bank, and then use this to drip feed the money into whatever investment option we choose? Is it possible to open a tracker fund as a 'trustee' account? Do I open separate accounts for each child, or invest the money as one pot and then divvy it up as they turn 18?

    Thanks
Page 1
    • Alexland
    • By Alexland 13th Feb 18, 11:16 AM
    • 1,576 Posts
    • 1,083 Thanks
    Alexland
    • #2
    • 13th Feb 18, 11:16 AM
    • #2
    • 13th Feb 18, 11:16 AM
    Check with the solicitors to determine if the unborn twins could be beneficiaries of the estate.

    If not I do agree the situation may appear unfair, but it would be a breach of trust to redistribute the existing children's assets, so maybe you are both in a position to make further contributions over a number of years to help balance things out?

    Anyway assuming the money is to be split across the 3 children equally:

    Suggest you consider opening individual bank accounts such as the 123 Mini for each child to save £2k each at nearly 3% interest.

    Then gradually move the money into Junior ISA accounts for each child using £4k+ allowance each tax year.

    If they are young enough then S&S Junior ISAs such as Vanguard Investor (Vanguard Target Retirement funds to reduce risk as they get towards 18) or Orbis Access (Balanced fund) might be good. Otherwise probably cash Junior ISAs from the best buy tables.

    Given the current tax year ends on 5th April you can get 2 years allowance (over £8k per child) Junior ISA wrapped in the next 2 months.

    So with around £25k in Junior ISAs and £6k in 123 Minis you just need to hunt around elsewhere to stash the balance of circa £9k (£3k each) until the next tax year starts in 14 months.

    Eventually these accounts will mature into adult bank accounts and ISAs and they will be able to use them for their first stages of adult life.

    Alex
    Last edited by Alexland; 13-02-2018 at 11:51 AM.
    • Peeweeontour
    • By Peeweeontour 13th Feb 18, 12:04 PM
    • 24 Posts
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    Peeweeontour
    • #3
    • 13th Feb 18, 12:04 PM
    • #3
    • 13th Feb 18, 12:04 PM
    Thanks for your response, I believe the money can be split including the twins - the terms of the will state:

    1/3 thereof for such of my grandchildren as shall be living at the date of my death or be born before 1st January 2030 and attain the age of eighteen years and if more than one in equal shares or if there are no such grandchildren then for such of my children as are living at the date when it becomes apparant that this gift has failed and if more than one in equal shares.

    then goes on to say we can invest money with freedom etc.

    The solicitor has written to say that the money is to be split between any children that are born before 1st Jan 2030. I am not sure if this complicates things, as potentially then we could all have more children (although neither of us are planning anymore!)
    • Alexland
    • By Alexland 13th Feb 18, 12:10 PM
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    Alexland
    • #4
    • 13th Feb 18, 12:10 PM
    • #4
    • 13th Feb 18, 12:10 PM
    Yes it is a complication and the requirement to reach the age of 18 probably rules out Junior ISAs as if a child dies early the money would incorrectly pass back to the parents - has the solicitor given any guidance on the matter? Perhaps they would help you setup a trust as a legal entity to hold the undistributed money?

    Alex
    Last edited by Alexland; 13-02-2018 at 1:18 PM. Reason: Typo
    • Peeweeontour
    • By Peeweeontour 13th Feb 18, 12:25 PM
    • 24 Posts
    • 4 Thanks
    Peeweeontour
    • #5
    • 13th Feb 18, 12:25 PM
    • #5
    • 13th Feb 18, 12:25 PM
    Our solicitors have been less than helpful, its taken almost 18 months to get probate for a fairly simple case - couple of bank accounts, we sold the flat to a neighbour quickly, and some saga shares. The solicitor dealing with the case then retired early this year and no one informed us. We are still waiting for our share of the estate to be paid to us. The new solicitor was more helpful however so I could go back to her. I am very certain I am not having any more children and the same on my brothers side. I will ask if they can distribute 3/5ths to the existing accounts (I already have 123 account for my 2 children) and to hold on to the remaining 2/5ths until the twins are born.
    • Peeweeontour
    • By Peeweeontour 13th Feb 18, 12:34 PM
    • 24 Posts
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    Peeweeontour
    • #6
    • 13th Feb 18, 12:34 PM
    • #6
    • 13th Feb 18, 12:34 PM
    sorry another question, with the S&S junior isa's, this year I would have to put a lump sum in to be able to invest the whole 4k. However would I be better drip feeding over the next tax year?
    • Alexland
    • By Alexland 13th Feb 18, 12:36 PM
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    Alexland
    • #7
    • 13th Feb 18, 12:36 PM
    • #7
    • 13th Feb 18, 12:36 PM
    Sure you can ask but my reading of that drafting is that the money would be best invested in a single account until the beneficiaries are clear. It may be unexpectedly more or less than these 5 children in 2030 and even then they may not reach the age of 18 to qualify for their distribution.

    In terms of investing lump sums there are lots of ways to get into the swimming pool so I suggest you use the method you feel most comfortable with.

    As the general market direction is upwards it makes most sense to invest the lump sum at the start however you risk picking a bad time and people get upset if it immediately drops so by investing gradually you limit your initial losses and will hopefully accumulate some gains before the contribution period is over. However it could still drop by more than these gains the next day.

    Also on the Junior ISA question (not that I think it will work for this money) both Vanguard and Orbis allow you to hold the contributions in cash so just because the contribution is made this tax year against the allowance doesn't mean the investment needs to be made as a lump sum.

    Alex
    Last edited by Alexland; 14-02-2018 at 7:05 AM.
    • xylophone
    • By xylophone 13th Feb 18, 2:19 PM
    • 24,441 Posts
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    xylophone
    • #8
    • 13th Feb 18, 2:19 PM
    • #8
    • 13th Feb 18, 2:19 PM
    1/3 thereof for such of my grandchildren as shall be living at the date of my death or be born before 1st January 2030 and attain the age of eighteen years

    You cannot be certain that there will be no more children born before 2030.

    The money is not indefeasibly vested under the terms of the will.

    See

    https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem1563

    This is not a bare trust and the Trustees will need to make a tax return.



    https://www.gov.uk/trusts-taxes/types-of-trust

    Be sure that you understand the tax position.

    You say that you have unfettered powers of investment.

    You might open an account "Trustees of the AB Other Will Trust" with the likes of Charles Stanley/Hargreaves Lansdown etc.

    You can then choose suitable investments.


    It may be that you will not be able to make any distribution until the youngest of the beneficiaries reaches the age of 18.

    If your solicitor is not expert in Trusts, he can check with one who is.

    https://www.step.org/member-directory
    • IanManc
    • By IanManc 13th Feb 18, 3:38 PM
    • 427 Posts
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    IanManc
    • #9
    • 13th Feb 18, 3:38 PM
    • #9
    • 13th Feb 18, 3:38 PM
    I will ask if they can distribute 3/5ths to the existing accounts (I already have 123 account for my 2 children) and to hold on to the remaining 2/5ths until the twins are born.
    Originally posted by Peeweeontour
    For a start, the way that will clause that you've quoted is written makes it clear that you cannot distribute any money to any grandchild until he or she reaches the age of 18. If you do you'll be in breach of trust.

    Secondly, equal shares go to each grandchild born before 1.1.2030 so you need to wait to see that no further children have been born alive before that date - whatever your current intentions about continued child production - before distributing the assets of the trust. If any more children did come along you'd be in breach of trust and as trustees personally liable to pay the share of the child or children for whose share you'd already split between the others.

    And I hope this doesn't happen, but if any grandchild living at the time of the grandfather's death attains 18 but then dies before 1.1.2030 then on 1.1.2030 that child's share would go to the child's estate and pass under their will or according to the Intestacy Rules applicable to their estate.

    The reason you can't distribute before 1.1.2030 is that the potential membership of the class of people who may be entitled to the money in the trust doesn't close / crystalise until that date.
    • Peeweeontour
    • By Peeweeontour 13th Feb 18, 8:17 PM
    • 24 Posts
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    Peeweeontour
    Thanks for the responses, this was my initial understanding - that we would need to invest the money as a whole and then distribute when they reach 18 (the eldest will turn 18 just before 01.01.2030) . It was the solicitor that recently advised me to pay into individual bank accounts.

    I'm still not clear then how I actually set up an investment that we can have this money paid into? Can I pay into a stocks and shares ISA as a trustee?
    • Alexland
    • By Alexland 13th Feb 18, 8:24 PM
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    Alexland
    I'm still not clear then how I actually set up an investment that we can have this money paid into? Can I pay into a stocks and shares ISA as a trustee?
    Originally posted by Peeweeontour
    No an ISA is for individuals not trusts. As xylophone describes you will need to setup a normal investment account on a platform such as HL in the name of the trust that your solicitor has setup and make sure that tax is paid as appropriate.

    http://www.hl.co.uk/investment-services/fund-and-share-account/faqs

    Can I open a Vantage Fund & Share Account in the name of a trust?

    Yes. To apply for a Vantage Fund & Share Account in the name of a trust, you would need to send us an application form via the post which can be requested from our Investment Helpdesk on 0117 900 9000.

    We require the original or a certified copy of the Trust Document with the accompanying application form and, if not already in the Trust Document, a list of names and addresses of all authorised trustees and beneficiaries.

    It is not possible to apply for a Vantage Fund & Share Account in the name of a Trust online or over the telephone.
    Last edited by Alexland; 13-02-2018 at 8:29 PM.
    • xylophone
    • By xylophone 13th Feb 18, 10:41 PM
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    xylophone
    https://www.oldmutualwealth.co.uk/globalassets/documents/literature-library/omwla/generic-and-intermediary/omw_sk6867_a_guide_to_investment_for_trustees.pdf

    https://whichinvestmenttrust.com/trusts-we-like/

    http://www.telegraph.co.uk/investing/funds/telegraph-25-favourite-funds-has-buy-list-performed/

    http://monevator.com/low-cost-index-trackers/

    http://monevator.com/automatic-investing/


    may be worth a read.

    Be sure that you establish the type of Trust - probably accumulation/discretionary for tax purposes?
    • Heedtheadvice
    • By Heedtheadvice 13th Feb 18, 11:12 PM
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    • 355 Thanks
    Heedtheadvice
    You are getting excellent comments latterly from xylophone and Alex. Edit: and apologies should have included you here too Ian!

    You MUST initially understand your responsibilities as trustees.
    The trust will have costs even if no more than tax so you need a trust account to operate the trust.
    You will need to inform HMRC trusts and complete a trust tax return each year regarding income and capital gains.
    You cannot divide up the funds into individual accounts on behalf of the beneficiaries - you do not know how many there will be and your costs come out of the trust's funds.(you are right therefore as mentioned at the outset to be very aware of professional fees both initially and recurring ones).

    My experience would lead me to not have a trust of that amount set up from any estate I might leave!

    There is such a thing as a deed of variation that might be employed to effectively change a will -provided the beneficiaries agree but I doubt if that would be appropriate when the beneficiaries are not adults or even unknown at present. You would need to get legal advice regarding that!!

    Trusts can look simple especially when you have been given the freedom to invest as you choose by the settlor (your father) but you hands are also tied to an extent by trust law and ensuring you do EVERYTHING in the best interest of the beneficiaries. That might not be just what you think is best for them!

    Good luck.
    Last edited by Heedtheadvice; 14-02-2018 at 12:17 PM. Reason: I forgot Ian's good post!
    • IanManc
    • By IanManc 13th Feb 18, 11:25 PM
    • 427 Posts
    • 669 Thanks
    IanManc
    There is such a thing as a deed of variation that might be employed to effectively change a will -provided the beneficiaries agree but I doubt if that would be appropriate when the beneficiaries are not adults or even unknown at present. You would need to get legal advice regarding that!!
    Originally posted by Heedtheadvice
    A Deed of Variation is a complete non-starter. Minor beneficiaries do not have the legal capacity to make a deed, and as I said in my earlier post, the class of beneficiaries of this trust does not crystallise until 1.1.2030 so you are stuck with administering this will trust until you can finally pay out to the youngest beneficiary born before that date, when he or she reaches 18.
    • Heedtheadvice
    • By Heedtheadvice 14th Feb 18, 12:14 PM
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    Heedtheadvice
    Thanks for clarifying Ian.
    I thought that was the case but was not absolutely certain!
    • Peeweeontour
    • By Peeweeontour 15th Feb 18, 9:19 AM
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    Peeweeontour
    one more question! have been looking at the types of trust on HRMC. xylophone mentioned to establish the type of trust

    "Be sure that you establish the type of Trust - probably accumulation/discretionary for tax purposes"

    Is this something we as trustees determine, or does the trust set out what it should be?
    • xylophone
    • By xylophone 15th Feb 18, 2:31 PM
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    xylophone
    Is this something we as trustees determine, or does the trust set out what it should be?
    It is not a bare trust.

    https://www.gov.uk/trusts-taxes/types-of-trust

    See above and check with your solicitor.

    As it is not a bare trust and as you propose stockmarket investments see

    http://forums.moneysavingexpert.com/showthread.php?p=73883589#post73883589
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