Children's saving accounts

Reaper

It does seem a dodgy practice. If it ever did come to court you could be sure both sides legal costs would be dumped on you for going ahead with a court case you knew you would lose!

However I can't imagine a breakdown in our family so severe that my child would sue me to obtain a gift. And if he was bright enough to discover his legal rights and motivated enough to initiate legal proceedings then I would fold in the hope a child that smart would be unlikely to waste it.

ANGLICANPAT

xylophone wrote: »

Are BG absolutely certain of the legal position?

Are BG prepared to put in writing that if the beneficiary asks for the money, it can legally be withheld unless the Trustee gives consent or a court order is made forcing them to pay the beneficiary?[/B]

I think they might be able to , because they expressly said today that they could NOT touch the money to give to anyone, because they had no legal way of doing it , its not theirs, they dont own it , its entirely up to the T's to do the paperwork to release it. But, Im sure they would have to obey a court order -- but a court order wouldnt happen until a court case had been brought to bear against the T 's surely? Dont think it would be against BG?

Like you Reaper, I would give in at the hint of a court case , and hope my grandchild would become a brilliant entrepreneur or legal eagle if she took me to that point!
I do think its dodgy, but at the same time its the only way you stand a chance of keeping the money out of harms way for that little bit longer, without doing fancy trusts and oodles of tedious returns and paperwork. Im still pleased to have it --so far !

Hopefully theres no risk attached now it will be confirmed in writing that the plan is definitely in a Bare Trust and the end date doesnt invalidate it, as long as we make sure the child is aware of the trust once he or she has taxes and or benefits etc to subscribe to , and we are prepared to drop out if things turn ugly .

xylophone

No, it was a simple one off lump sum left to the child in a will

Another thought, if this sum was left to the child in a will, and without contingency ( ie the will simply said "I leave £xx to John Smith) and the only reason that John could not have the money immediately was that as a minor, he could not give valid receipt, then he is entitled under the terms of the will to receive the money once he reaches the age of majority?

ANGLICANPAT

Yes, I guess so xylophone , but it doesnt in reality change anything --from whichever angle the beneficiary wanted to prove the appointed T's were in the wrong and he WAS entitled to immediate payment , it would still be a matter of the child having to bring a case against the trustees in order to dismantle the trust .

There seems to be no doubt , that which ever way you look at it ,the B is definitely entitled to the goodies at 18 - so there is no doubt that if the B went to court , he/she would win, so obviously one wouldnt really go ahead with that course of action . (Unless I suppose you took legal advice if the child had a serious drug problem and/or was mentally unstable)

Therefore it looks like BG are just trying to make it appear that they are offering a proper working loophole to Settlors , by ambiguously putting that extended end date option in and by making it sound on the phone, that that is an accepted way of holding onto the trust till the child is older.

Really its an illusion -- all they are offering, is a suggestion that you can break the law because most B's wont be in a financial position to oppose you , so its fine as long as the child cant call your bluff!

Naughty, but Im happy with it , because I wouldnt have thought of it myself , and if showing my grandchild the form with 21 on it, when she is hell bent at 18 on getting her mitts on the money to fund an international shelter for homeless skunks or whatever, helps me to convince her it will be hard to get at her inheritence till that stated date, then 'result' ! Long live bluffing when its for the right reasons.:D

melizaarora

Really interesting, i also had same doubt.

ANGLICANPAT

xylophone wrote: »

Are BG prepared to put in writing that if the beneficiary asks for the money, it can legally be withheld unless the Trustee gives consent or a court order is made forcing them to pay the beneficiary?[/B]

See the letter I got this morning from the person I spoke to at BG yesterday, all signed properly by the Client Relations Administrator. Word for word except for abbreviations and grammar slips.

Dear ---
BG Childrens Savings |Plan

I write further to our tel conversation in regards to the Bare Trust Childrens Savings Plan that you have recently opened .

As the investment has been made into a Bare Trust, I can confirm that we will not release the proceeds until we have a written request from the named T's on the account. The date that you have added onto 'section 9' "About the child" will not invalidate the Bare Trust, even though the date provided is a date after the child's 18th birthday. The plan will be held as a BT until we hear from the T 's listed on the account.

If the child contacted us after they had turned 18 and requested that the funds are to be released, we would request that they contact the T's to arrange this. The child does have a legal right to the funds when they turn 18, but in the instance when the T's were not willing to release the funds, it is our understanding that the child would have to start legal proceedings in order to have the funds released.

Yours sincerely


Quite impressed really - how often when you ask for a tel conversation to be cofimed in writing , do all the salient points get addressed - and by the next day!

xylophone

http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/

"If the plan is set up as a bare trust, when a child reaches 18 the child can then ask the trustees to hand over the investment and the trustees are obliged to do so."

Can BG aid and abet the Trustees in an illegal act?

http://www.step.org/minor-note

"As the minor is the absolute owner from the outset, there is no disposal by the bare trustee on the beneficiary reaching 18, the point at which a sole beneficiary can call for the assets to be transferred to him."

And see http://www.invtrusts.co.uk/pdfupload.nsf/0A635E27E2EA403B802571EF0037864D/$FILE/IPchildrenbrochure.pdf?OpenElement Page 9

"2. Bare trust
This is a legal trust that is set up which specifies the child as
beneficial owner of the shares. With a bare trust, you have no
rights to the shares, although you can retain legal control as a
trustee until the child is 18 – at which point the shares are
automatically transferred into the child’s name."

ANGLICANPAT

xylophone wrote: »

]

"If the plan is set up as a bare trust, when a child reaches 18 the child can then ask the trustees to hand over the investment and the trustees are obliged to do so."

Can BG aid and abet the Trustees in an illegal act?[/B]

Only if they can disguise it in a credible wrapper -- which they have ! By offering the recording of a later date for the plan to continue to, they have merely made it possible for the trust to continue seamlessly on till that date if the child so chooses to let it.
Regarding them pointing out that they understand that the legal challenge route is the only way the child can take possession of the money ,should the T's refuse to hand over at 18

---

they are merely stating a fact .

I dont see in practice where they would be acting illegally because in writing, they arent suggesting you do anything. What they actually say verbally, is hard to prove, and I suppose its more a case of putting 'veiled ideas' in your head rather than actual suggestions, so that you come up with the actual realization of what you can achieve, yourself.

xylophone

if the child so chooses to let it.

This seems to me to be the point.

they understand

On whose authority?

acting illegally?

It is undoubtedly the case that the beneficiary has an absolute right to access and control at the age of 18?

The beneficiary undoubtedly owns and has always beneficially owned the assets in question?

BG would be facilitating the Trustees' refusal to allow access to assets which the Trustees no longer had the legal right to control?

All in all, this makes me feel very uneasy.

ANGLICANPAT

All that matters to me is whether my grandchildren's funds
a) make reasonable interest
b) are safe
and c) I dont end up in prison or fined!

I'm gambling that as they've been doing these funds for years without being pulled up on this particular practice , and because they are prepared to put what they did in writing , then our capital is safe . If they were in the future found to be guilty of breaking a law, Im also gambling that people's accounts would just be taken over by a different, court appointed administrator and be ok. We are doing nothing wrong unless we make a decision to not pay out the money , so we are squeaky clean at this point.
What are you worried might happen or what risks do you thinkk we are taking , as long as we dont actually fight the child in court?