Trust Fund Return

79Hoodedclaw

Hi
I have recently inherited 400k from my grandparents and I am thinking of putting it in a bare Trust Fund for myself and my children to use.Does anybody know what would be the approximate anuanl growth on a trust fund of that size with the fund invested in medium risk shares?
I am just seeing if a trust would be the best option or if I should buy a few buy to let's

Thanks
N

kidmugsy

How old are your children? Indeed, how old and rich are you - that is, should you looking forward with a view to avoiding IHT when you pop your clogs? For that purpose, would a Deed of Variation to put the money into a Discretionary Trust be a good idea? With, say, you and your wife as Trustees, and yourself, wife, children, grandchildren etc as beneficiaries: well worth considering.

For IHT purposes your grandparents would count as Settlors; for income tax purposes you would. If that doesn't appeal, you could scrap the idea and simply gift £325k to an ordinary Discretionary Trust with the same Trustees, and with your widow, children, etc as beneficiaries. Then you'd want to be sure to survive for seven years (or insure yourself against the consequences of failing to).

Or split the money between the two sorts of Trust. Why not consult an expert lawyer after you've considered the comments that will accumulate here?

79Hoodedclaw

My children are grown up now,both over 25.I thought I would ask on here before speaking and paying for expert advice.I am looking for the money to generate an income my kids so I am interested in what the annual growth would be on a trust fund of that size.

Mojisola

Why not do a deed of variation of the will and pass some of the money directly to your children?

They are old enough to make their own decisions about spending or saving the money.

xylophone

What would be the point of a bare trust?

http://www.hmrc.gov.uk/manuals/tsemmanual/tsem1563.htm

https://www.gov.uk/trusts-taxes/overview

If you intend to set up a trust, take expert advice.

http://www.step.org/member-directory

A solicitor would be unlikely to advise on investment - you would need an IFA -https://www.unbiased.co.uk/

If you wish your adult children to benefit immediately, look at a Deed of Variation? http://www.hmrc.gov.uk/manuals/tsemmanual/tsem1815.htm

grey_gym_sock

79Hoodedclaw wrote: »

I am just seeing if a trust would be the best option or if I should buy a few buy to let's

is the question about underlying investments (shares vs BTL) or about tax structure (in trust vs directly held vs other)? these are orthogonal. i.e. you can hold either shares or property either in trust or directly. (and you've said your children are over 18, so they are able to hold property directly, too.)

investment returns depend on the underlying investments, not on the tax structure.

the best tax structure depends on your overall tax position. e.g. are your (and your spouse's and children's) ISAs and pension allowances being used in full? (because those simple tax shelter are usually the place to start, rather than trusts of any kind.) and what income tax rates is each person paying? what other investment do they have? is IHT an issue? etc.

note that a bare trust implies that the beneficiary has the right (at least when they are over 18) to demand the entire contents of the trust is handed over to them directly at any time. which means that it must be explicit how much of the trust belongs to each person. if you have a trust which is generally for your, your spouse's, and your children's benefit, but not in explicit proportions, then it would not be a bare trust but some other kind.

kidmugsy

79Hoodedclaw wrote: »

I am interested in what the annual growth would be on a trust fund of that size.

How the devil can we know? We don't have crystal balls. But you could do worse than assume (-10%) p.a. for the next four years.

badger09

@ grey gym sock
Thank you. I learned a new word today. Orthogonal :T