Capital in a Discretionary Trust

billywilly

Hi, I am one of two trustees (myself & my wife) of a discretionary trust.that was set up over 12 months ago. At the moment there is £85,000 of cash sitting in the trust's current account with Nat West. It has been there since last October earning no interest. Additionally the trust also owns 50% (£240,000 in value) by way of a mortgage of our home on an equity release basis with the DWP paying interest to the trust of £279 every 4 weeks.

The trouble we are having is trying to find a bank or building society or other financial institution that will accept the deposit. We would only be interested in 1/2/3 year bonds.
We have tried every bank/building society in the city and as soon as I mention that it is a discretionary trust they don't want to know.We even tried the Post Office and NS&I.
Is this normal? We really do need to get this money earning some interest for the beneficiaries - our children.

xylophone

Have you registered the trust with HMRC? See Income Tax for trusts

https://www.gov.uk/trusts-taxes/trusts-and-income-tax

http://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/trusts/introduction.htm#3c

https://www.caterallen.co.uk/term-deposit-account-for-trusts

http://www.ybonline.co.uk/business/our-products/savings/notice-account/notice-account-for-trusts/

SeniorSam

HI billy,

Have you given thought to Loan Trusts? My wife and I set up a £50k Loan Trust in October 2009 to ensure capital was available before Probate for the children and using rather conservative Life Funds, the growth has moved that fund to around £74k. As this is growth in Trust and not income then it is outside the estate and not subject to income tax.

Could be worth considering perhaps?

Sam

kidmugsy

It's notoriously awkward finding trust accounts, partly because some institutions don't offer them, partly because some staff don't have a clue. Here's a few possibilities I've read about in the last few years: the info may not be up to date.


(i) Saffron BS, Beverley BS, Leeds BS, Bucks BS.
(ii) Alliance Trust Savings
(iii) https://www.shawbrook.co.uk/savings/business-charity-trust-accounts/
(iv) You could try searching through this forum
http://www.taxationweb.co.uk/forum/inheritance-tax-iht-trusts-estates-capital-taxes-f8-25.html
(v) and study this
http://www.markthompsonlaw.com/best-bank-or-building-society-account-for-personal-injury-trust/personal-injury-trust-to-protect-personal-injury-compensation/
(vi) and these
https://forums.moneysavingexpert.com/discussion/4961966

https://forums.moneysavingexpert.com/discussion/5043860

https://forums.moneysavingexpert.com/discussion/5202399

https://forums.moneysavingexpert.com/discussion/5217753

kidmugsy

Are your children adult? If so why not just have the trustees lend them the money and they can then save it in the high-interest current accounts available at the moment.