Regret getting trustee account for my daughter - what to do now?

cooliegirl

xylophone wrote: »

I hope this is a JISA - and she does have the right to access the money at the age of 18. http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/SavingsAndInvestments/ISAsandJuniorISAs/DG_199672
If you were holding the money in the original account as her bare Trustee, then the money is hers absolutely and she had the right to access to it at the age of 18. Was it taxed correctly? See http://www.hmrc.gov.uk/tdsi/children.htm and http://www.hmrc.gov.uk/trusts/types/bare.htm

You can only subscribe your money to your ISA - the money in the account was your daughter's.

This is my own money, my own contributions, saved for my daughter.

MonkeyMad

I think the point being made is that as soon as you put the money into a trustee account it ceases to be yours and becomes the property of the entity for whom the trust was set up.

If you have just put your money in your ISA for your daughter, where is the money from HER trustees account that you have just withdrawn and she is legally entitled to?

If you have ever claimed a tax exempt status on the trustee account you may want to contact HMRC now that you have reappropriated the money into accounts in your name in case they get any ideas that you were sheltering income from your accounts to avoid paying tax.

If you wanted to maintain control beyond 18 then you should have set up a legal trust instead of a trust account.

wazza24

CLAPTON wrote: »

if it's in trust for your daughter then although you can withdraw the money it must be re-invested for the benefit of your daughter

legally it is hers and not yours

at 18 she has sole control; it would be illegal for you to prevent her having access.

Wise up clapton its a gift her mother has been saving for her, so its not hers till she hands it over.....:mad:

good job cooliegirl, i agree with ya 18 might be to young to give a lump sum to the kids. By the way don’t listen to half the idiots on here, they might know abit about financial rules and regulations but they haven’t an ounce of common sense..... :T

CLAPTON

wazza24 wrote: »

Wise up clapton its a gift her mother has been saving for her, so its not hers till she hands it over.....:mad:

good job cooliegirl, i agree with ya 18 might be to young to give a lump sum to the kids. By the way don’t listen to half the idiots on here, they might know abit about financial rules and regulations but they haven’t an ounce of common sense..... :T

if the money was held in the child's name then it has been held in a bare trust for the child.
it is absolutely and legally the child's.
the money could benefit from the childs tax allowance and be paid without tax being deducted
the mother has no right to the money

if it was held in the mother's name then it is still the mother's and should have been taxed as such

xylophone

wazza24 wrote: »

Wise up clapton its a gift her mother has been saving for her, so its not hers till she hands it over.....:mad:

good job cooliegirl, i agree with ya 18 might be to young to give a lump sum to the kids. By the way don’t listen to half the idiots on here, they might know abit about financial rules and regulations but they haven’t an ounce of common sense..... :T

I have been a trustee- have you? I know the legal and fiscal position.
Is it your opinion that those who obey the law in areas other than financial also "haven't an ounce of common sense"?

xylophone

CLAPTON wrote: »

if the money was held in the child's name then it has been held in a bare trust for the child.
it is absolutely and legally the child's.
the money could benefit from the childs tax allowance and be paid without tax being deducted
the mother has no right to the money

if it was held in the mother's name then it is still the mother's and should have been taxed as such

Possibly, but if the money was provided by the mother and the interest came to over £100 per annum, it should have been taxed as the mother's income. See http://www.hmrc.gov.uk/tdsi/children.htm
It is unclear whether the OP is aware of the rule or whether it was applicable to this account as details of capital and interest were not provided.

rpc

wazza24 wrote: »

Wise up clapton its a gift her mother has been saving for her, so its not hers till she hands it over.....:mad:

In a bare trust, the money is "handed over" when it is deposited.

good job cooliegirl, i agree with ya 18 might be to young to give a lump sum to the kids. By the way don’t listen to half the idiots on here, they might know abit about financial rules and regulations but they haven’t an ounce of common sense..... :T

Those rules and regulations mean that putting the money into a bare trust, and then taking it back for yourself is either tax fraud or theft. I'm not sure committing either of those offences is common sense. Common sense says "make sure you know what you are doing with your money before you do it". Not all financial decisions can be reversed (and putting money into a bare trust is one of those).

CLAPTON

xylophone wrote: »

Possibly, but if the money was provided by the mother and the interest came to over £100 per annum, it should have been taxed as the mother's income. See http://www.hmrc.gov.uk/tdsi/children.htm
It is unclear whether the OP is aware of the rule or whether it was applicable to this account as details of capital and interest were not provided.

in a bare trust I believe that the child has it's own tax allowance

see

Trust accounts
The most common type of trust account held for children is a bare trust. Bare trusts can be called by another name, for example re accounts or nominee accounts. An example of a bare trust account is ‘Mrs Smith re Miss Smith’.
A bare trust account held for a child can be registered for interest to be paid without tax taken off by completing form R85. The form R85 must be signed by the child’s parents or legal guardian.
So long as the child does not become a taxpayer, the form R85 can stay in place until the 5 April following the child’s sixteenth birthday.
After the child has turned sixteen the account must be transferred into their own name before it can be registered for interest to be paid without tax taken off. If the account remains as a bare trust account the interest must be paid after tax has been taken off.
See an example of a bare trust.
Different rules apply where a child is mentally incapacitated. Where a child who is mentally incapacitated reaches the age of sixteen, and their account has been registered by their parent or guardian, the registration may continue for the future. If the account is not already in the child’s name, it is not necessary for the account to be transferred into the child's name, or for the account to be re-registered.

xylophone

No - even if the money is in a bare trust, if it has been provided by the parent, the £100 rule applies. http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/Trusts/Typesoftrustandtaximplications/DG_191735
"Parental trusts for minors aren't a type of trust in their own right - they will be one of the following types of trust:
bare trusts - where the child is absolutely entitled to the income and the capital of the trust
interest in possession trusts - where the child may be entitled to all the income after expenses
accumulation trusts - where trustees can retain and add income to capital on behalf of the child
discretionary trusts - where trustees can make payments at their discretion to the child
With parental trusts for minors, the child's income from the trust is deemed to be the income of the settlor for Income Tax purposes. This rule only applies to trusts where a relevant child can benefit and the settlor and any spouse or civil partner are excluded. If the settlor (and spouse or civil partner) aren't excluded then the rules for settlor interested trusts apply instead. The rate of Income Tax that applies will depend on what type of trust it is.
Settlor-interested trusts
Find out more about the Income Tax rates for discretionary or accumulation trusts
Get more information about the Income Tax rates for interest in possession trusts
Income payments below £100
If the income arising from all parental gifts made by a parent to a child is less than £100, the child's trust income is not counted as the settlor's for Income Tax purposes.

MonkeyMad

wazza24 wrote: »

Wise up clapton its a gift her mother has been saving for her, so its not hers till she hands it over.....:mad:

good job cooliegirl, i agree with ya 18 might be to young to give a lump sum to the kids. By the way don’t listen to half the idiots on here, they might know abit about financial rules and regulations but they haven’t an ounce of common sense..... :T

We know why and where the money has come from, it's you that doesn't seem to understand the implications of it. People are pointing out that at the very least the OP is opening herself up to tax evasion scenarios, by just taking the money in her own name.

They are also pointing out than on a technicality the OP has no right to do this, and when daughter turns 18 she will have a right to pursue her mother for the money (and I recall a family I know having this happen).