Trustee Accounts

KCY

Hi everyone.

I have just over £20,000 to invest for my son that he has inherited from my late Husband. My Father and I are to be the trustees and he is allowed access to it when he turns 18. He is currently 4 years old. My son also receives a pension from my late Husbands final employer which means he currently pays tax.

Please could you help me with the following questions:

1) Are there specific savings accounts for trustees or can I open any account as obvously I would like to get the best possible interest rate for him.

2) Would I need to make sure that neither my Father or I don't have money in that particular financial institution that puts us over the £50,000 safety limit or would this money be classed as my sons.

3) Ideally I would like to tie the money up for 3 years to see how the market goes and then move it if necessary. I'm assuming there are no restrictions on moving funds that are in a trust.

Thank you in advance.

martinman3

1. You can open many adult accounts in trust for children, however, you may find that there is a child specific account which is opened in trust with a better rate.
e.g. Fixed rate bonds with Halifax, Skipton BS, Yorkshire BS and others can be opened in trust but recently Northern Rock had a fixed rate bond specifically for children at 5.00% AER fixed for 3yrs.

2. Accounts held in trust are treated as belonging to the beneficiary (child) not the trustee up to the £50k limit per institution.

3. Trustees have full control but for some accounts only until the beneficiary is a certain age, could be 16-21 max. Just move it elsewhere when this is about to become a problem.

Northern Rock have the Little Rock account at 3.00% AER instant access.
http://www.northernrock.co.uk/savings/branch-and-postal-accounts/little-rock-instant-access/
Rumour has it that another child's fixed rate bond will be launched sometime in the future but for instant access it can't be beaten.

Note that the adult fixed rate bonds can be opened in trust too.
http://www.northernrock.co.uk/savings/fixed-rate-bonds/

opinions4u

The status of the trust may or may not be defined by the wording of the will.

You need to establish:

1) Is it a discretionary or bare trust?
2) What legal responsibilities you have towards maximising returns for the trustee.
3) What legal rights you have to withdraw from the fund on behalf of the trusted.

Two step process this: Get legal advice first, then see an IFA.

Sticking this money in renewable term deposits year on year is unlikely to be the right thing to do.

dunstonh

The trustees have to be seen to be doing the right thing for the beneficiary. Is putting £20k in cash for 14 years likely to be considered the best thing? probably not.

If the Will stated the money was to go to the child and set the terms then a Will Trust will be needed. So, the money wont be in your name or the childs. It will be its own legal entity.

O4U above, has covered off the key initial points that need to be considered. You are jumping ahead without looking at the legal side first.

KCY

Thank you very much Martinman3.

Opinions4u & DunstonH, thank you. There wasn't a will, the remainder of my last Husbands estate, after the maximum allowance was passed to me, has automatically passed to my son. My Probate Solicitor asked me who I wanted to be a Trustee with me, then after the relevant paperwork was signed, just sent me a cheque, payable to myself and my Father, quoting the Trustees act 1925. I don't want to constantly be moving the money about but felt that investing it for a long period would not be the best thing in the long run.

dzug1

KCY wrote: »

. My son also receives a pension from my late Husbands final employer which means he currently pays tax.

Is the pension large enough for that? Remember he gets the normal personal allowance.

KCY

Yes I'm afraid so, it's approx £7500 a year.

Bob_Bridges

You could try Cater Allen ( part of Santander).

Check their website and look at Reserve Account for Trusts

http://www.caterallen.co.uk/SpecialistBanking/AccountDetails.aspx?pid=50

Hope this helps.

Bob

KCY

Thanks Bob, I have sent off for the information,