Trust funds

petunia100

Do trust funds have to have a manager or as a trustee can I run it myself?.
I want to avoid paying someone else to look after the money if possible.

Aegis

It depends on the original trust document. If it stipulates that a professional trustee must be appointed, then there's no way around it. If not, then the named or later appointed trustees can manage it, though they need to be aware of their duties under both law and the trust documents.

petunia100

Aegis wrote: »

It depends on the original trust document. If it stipulates that a professional trustee must be appointed, then there's no way around it. If not, then the named or later appointed trustees can manage it, though they need to be aware of their duties under both law and the trust documents.

The will doesn't stipulate a professional trustee. Where could I find out information about my duties? I have searched the internet several times without success. Could I just open an account with the name of the child and trust in the title?

dunstonh

If the trust is stated in the Will then you are probably looking at a Will Trust. Although there are many other trusts available. Requirements of trustees will often depend on the trust in question.

The first duty of a trustee is to become familiar with the terms of the trust and then to gain control over the trust property. The trustee must then administer the trust property for the benefit of the beneficiaries in the manner set out by the trust. A trustee has a duty to invest any trust money not immediately required to be paid out. Trustees must use utmost due diligence. If they depart from this standard of care, the law will hold them liable for any loss caused by a breach of this duty. The definition used is to act bona fide with the diligence that a prudent man of business would use in managing his own affairs. (Speight vs Gaunt 1883)

So, in summary, you need to know what you are doing and not only do what is best for the beneficiary but also be seen to be doing what is best. So, consideration like sticking trust property into a savings account for a 2 year old who cant benefit until age 23 could be seen as a failure of best interest. Equally, using investments if there is just 2 years left could be seen as failure.

petunia100

dunstonh wrote: »

If the trust is stated in the Will then you are probably looking at a Will Trust. Although there are many other trusts available. Requirements of trustees will often depend on the trust in question.

The first duty of a trustee is to become familiar with the terms of the trust and then to gain control over the trust property. The trustee must then administer the trust property for the benefit of the beneficiaries in the manner set out by the trust. A trustee has a duty to invest any trust money not immediately required to be paid out. Trustees must use utmost due diligence. If they depart from this standard of care, the law will hold them liable for any loss caused by a breach of this duty. The definition used is to act bona fide with the diligence that a prudent man of business would use in managing his own affairs. (Speight vs Gaunt 1883)

So, in summary, you need to know what you are doing and not only do what is best for the beneficiary but also be seen to be doing what is best. So, consideration like sticking trust property into a savings account for a 2 year old who cant benefit until age 23 could be seen as a failure of best interest. Equally, using investments if there is just 2 years left could be seen as failure.

No, the trust is not stated in the will. We have been paid the money. The will just states that the children's money is to be held in trust until they are 21.

We are expected to set up the trust but I can't find any information about how to go about it.

dunstonh

No, the trust is not stated in the will. We have been paid the money. The will just states that the children's money is to be held in trust until they are 21.

Your first sentence has said no trust is stated in the Will. The second sentence says it should be held in trust. Which is it? The latter would indicate a Will Trust should be used (the most common type in this scenario)

We are expected to set up the trust but I can't find any information about how to go about it.

The executors of the estate should not distribute the funds but set up an investment under a Will Trust as the trust requirement was stated in the Will.

bobthedambuilder

Petunia100, I have recently been involved in setting up trusts for my daughter who received a personal injury compensation payout.

Given the legal, tax and benefit ramifications I would recommend that you get a professional to set up the trust(s). We had a solicitor do it. This is an expense (we paid about £500 per trust), but should come out of the estate as it's a condition of the will. Banks will also do it, but they'll be pressing very hard to be involved as trustees, and most likely will only recommend their own trust management services.

You can be a trustee, and a solicitor would explain fully what your responsibilities and duties are as part of his services. My wife and I are trustees of our daughter's trusts. As dunstonh says, your responsibilities are to act in the interests of the beneficiary/ies, and if you feel competent to invest the money, you can do it yourself. Banks will set up trust deposit and savings accounts (our experience is that you will not get the highest interest rates, as they're not personal accounts). You can also invest in markets in the trust(s) name(s) - we used a well-known discount broker who has provided an excellent and cheap service so far (compared to what the banks wanted to charge!). As trustees you will be responsible for things like annual tax returns for the trusts - we've yet to jump that particular hurdle.

petunia100

dunstonh wrote: »

Your first sentence has said no trust is stated in the Will. The second sentence says it should be held in trust. Which is it? The latter would indicate a Will Trust should be used (the most common type in this scenario)



The executors of the estate should not distribute the funds but set up an investment under a Will Trust as the trust requirement was stated in the Will.

The executor who is a solicitor just paid us the money as we are the trustees and said we could just open a building society account for them. We have not been able to get any more info from him.We don't know what to do with it. At the moment the money is sitting in a low interst childrens account.
We saw a financial advisor who told us that we should put it in a trust account, but that would incur charges as it would have a trust fund manager. We would rather run it ourselves thus avoiding paying a third party to run it.

petunia100

bobthedambuilder wrote: »

Petunia100, I have recently been involved in setting up trusts for my daughter who received a personal injury compensation payout.

Given the legal, tax and benefit ramifications I would recommend that you get a professional to set up the trust(s). We had a solicitor do it. This is an expense (we paid about £500 per trust), but should come out of the estate as it's a condition of the will. Banks will also do it, but they'll be pressing very hard to be involved as trustees, and most likely will only recommend their own trust management services.

You can be a trustee, and a solicitor would explain fully what your responsibilities and duties are as part of his services. My wife and I are trustees of our daughter's trusts. As dunstonh says, your responsibilities are to act in the interests of the beneficiary/ies, and if you feel competent to invest the money, you can do it yourself. Banks will set up trust deposit and savings accounts (our experience is that you will not get the highest interest rates, as they're not personal accounts). You can also invest in markets in the trust(s) name(s) - we used a well-known discount broker who has provided an excellent and cheap service so far (compared to what the banks wanted to charge!). As trustees you will be responsible for things like annual tax returns for the trusts - we've yet to jump that particular hurdle.

Thanks for your advice. The £500 you speak of would not be able to come out of the estate as all the money has been paid out now. We saw a finacial advisor, but they advised us to set up a bank trust account which we don't want to do.

dunstonh

The executor who is a solicitor just paid us the money as we are the trustees and said we could just open a building society account for them.

If a trust is specified in the will then that was not the correct thing to do. It should be made payable to the "trustees of......" or payable to "investment firm in respect of the Will Trust of ......."

We saw a financial advisor who told us that we should put it in a trust account, but that would incur charges as it would have a trust fund manager. We would rather run it ourselves thus avoiding paying a third party to run it.

Savings accounts have charges as well. Indeed, they are often higher than investment funds. The difference is that one tells you what the charge is. The other does not. I would suggest though that if you get advice do not use an FA but use an IFA.

petunia100

dunstonh wrote: »

If a trust is specified in the will then that was not the correct thing to do. It should be made payable to the "trustees of......" or payable to "investment firm in respect of the Will Trust of ......."



Savings accounts have charges as well. Indeed, they are often higher than investment funds. The difference is that one tells you what the charge is. The other does not. I would suggest though that if you get advice do not use an FA but use an IFA.

Totally confused by it all really. Could we not just opn accounts in the childrens names and run them ourselves?