Need to comply with Will...

Not_Radio2

My father died nine years ago and left money for my son to have when he reaches 25. I was an executor to his Will - along with two other family members. (My son is now 13 years old).
When Probate was granted, and funds released, I invested my sons inheritance in Premium Bonds, automatically reinvesting his wins into more Premium Bonds and luckily for him he has now reached the maximum (£30K) which can be held.
This month he has had another win which now NS have sent out in my name, as no more can be put into Premium Bonds. As my son cannot have access to the original money until he is 25, under the terms of my fathers Will where would be best place to place this win - and anymore that may come along? I am aware that when he reaches 16 that Premium Bond wins will be released in his name.
Should I just open a joint account with him and simply place the Premium Bond wins in it, or do I need a 'specialist' account/trust account of some kind?
Thanks.

princeofpounds

Personally I think you are destroying a lot of value by keeping it in premium bonds and cash for another 12 years. Inflation of 3% and returns of 1.5% for 12 years will cut the real value by 20%.

Unfortunately I'm no expert on trust law so I can't tell you what you can do with it.

dunstonh

When Probate was granted, and funds released, I invested my sons inheritance in Premium Bonds, automatically reinvesting his wins into more Premium Bonds and luckily for him he has now reached the maximum (£30K) which can be held.

Whose name are these held in?

I assume you are a trustee? If so, you have a legal responsibility to do what is best for the beneficiary. I doubt Premium bonds would be considered best. This leaves you open to future action by the beneficiary for being negligent in your duties. Unlikely a son would do that but families do fall out. Especially over money.

This month he has had another win which now NS have sent out in my name, as no more can be put into Premium Bonds.

This suggests they are in your name. The assets should not be in your name.

or do I need a 'specialist' account/trust account of some kind?

There should be a trust in place. A Will Trust is very common but there are other suitable ones as well.

helptoyou

I assume you are a trustee? If so, you have a legal responsibility to do what is best for the beneficiary. I doubt Premium bonds would be considered best. This leaves you open to future action by the beneficiary for being negligent in your duties. Unlikely a son won do that but families do fall out. Especially over money.



Complete rubbish depends on the term of the will if the father left x amount for grandchild at age 25 the responsibility of the trustees is to hand over x amount at age 25 any interest earned is a bonus !!!

xylophone

This money should have been held in trust - the type of trust depends on the exact terms of the will. Assets should have been held not in the name of the beneficiary but in the name of the Trustees -
http://www.hmrc.gov.uk/trusts/types/

https://docs.google.com/viewer?a=v&q=cache:gWHx-FU1khsJ:www.multilaw.com/files/documents/trusteeguide.pdf+&hl=en&gl=uk&pid=bl&srcid=ADGEEShLSY5H8DSMP8NPThFF966AspQrX18hoV0U90oBpZ131Qx165f4e77KIZDv36y0kNVYCGdKGrBINglpnpYRdV1rnMWuJJNCoBGuhMhrOJSTAGlogru4JbDywx2RKS7jdPQHM7z7&sig=AHIEtbQqfVYnqcxoO-hb55Xn2xl3Z9TeMw

It just so happens that some money has been won but I am not sure that using your son's inheritance in this way would be regarded as good practice.

Time to take some professional advice?

http://www.step.org/system_pages/call_to_action_navigation/member_search.aspx?link=header-menu

helptoyou

What we need here is the exact wording from the will on how the funds were left to the son and who was to look after these funds until he turned 25 (I assume it would have been left in trust but who are the trustees all executors to the will or just mother)

jimjames

helptoyou wrote: »

Complete rubbish depends on the term of the will if the father left x amount for grandchild at age 25 the responsibility of the trustees is to hand over x amount at age 25 any interest earned is a bonus !!!

Agreed we need to know wording but it would seem very unlikely that a will worded correctly would state that an amount of x had to be handed over at a particular age.

If that was the case then what would happen to the balance of any increase?

Far more likely that it would state the amount at the time and that it had to be invested/saved for them until a specified future date. Most people leaving money to someone over a 20 year period would want it to grow to the maximum benefit of the recipient and to ensure that the appropriate means was used to do that.

atush

We don't know the details of the will, but I agree with statements above the money should have been invested (or a portion of it) rather than left to wither on the vine of cash.

you need to consult a professional about investing this for the remaining term in a place that will accept trust accounts. Don't leave it in Premium bonds, or cash.

For instance, one of the investment trusts I invest money in for my 3 boys is up over 18% this year to date alone. Whereas your son's holding in PBs is up 20% over 9 years which is just over 2% per year and inflation over that period I am sure was more therefore this money is worth less than when left to him.

So, consult a professional IFA and get this money earning better. at least the lions share of it.

helptoyou

jimjames wrote: »

Agreed we need to know wording but it would seem very unlikely that a will worded correctly would state that an amount of x had to be handed over at a particular age.

If that was the case then what would happen to the balance of any increase?

Far more likely that it would state the amount at the time and that it had to be invested/saved for them until a specified future date. Most people leaving money to someone over a 20 year period would want it to grow to the maximum benefit of the recipient and to ensure that the appropriate means was used to do that.

JimJames- disagree with your first point its most likely, wills are only as complicated as you want to make them of course the trustees would be expected to grow the funds as best they could but that is up to there judgement (hence trustees) who's to say what the maximum benefit could have been if you looked in hindsight it would mean virtually every beneficiary of a trust would have a case against the trustees with regards to what would have been the best investment for the funds an absurd situation.

rpc

helptoyou wrote: »

of course the trustees would be expected to grow the funds as best they could but that is up to there judgement

But that judgement has to reach a certain minimum standard of competence. Investing in cash with a 20 year horizon is not a sensible investment decision and any trustee that made it would be derelict in their duty. Likewise, if trustees put it all in a high volatility portfolio when there was only 6 months for the trust to run, they would also be in trouble.

It is not about making the single best decision, it is about making a choice that is sensible. If the trustees are not competent to make that choice, they are obliged to seek professional advice.

helptoyou

rpc wrote: »

But that judgement has to reach a certain minimum standard of competence. Investing in cash with a 20 year horizon is not a sensible investment decision and any trustee that made it would be derelict in their duty. Likewise, if trustees put it all in a high volatility portfolio when there was only 6 months for the trust to run, they would also be in trouble.

It is not about making the single best decision, it is about making a choice that is sensible. If the trustees are not competent to make that choice, they are obliged to seek professional advice.

If a sum of money is left contingent on a person reaching a certain age its the responsibility of the trustees to ensure that happens . Yes in an ideal world they will be able to increase its value by sound investing and should seek advice if unsure but and its a big but if the will states 10k to be left to x on reaching x age that is the prime responsibility of the trustees as i said earlier any increase by investing is a bonus.

Of course in this case we do not know the exact wording of the will but normally i would expect the above case to be a contingent trust as it requires funds to be only paid out when the beneficiary reaches a certain age.

Ideally the funds should be held in a trust account by the trustees for the benefit of the beneficiary the trustees have to act in accordance of the deceased wishes (hopefully)