Setting up a Trust Fund for a child

dee342

I'm after some advice about setting up a trust fund for a child.

I have been made executor of my sister in laws will who passed away recently. She has left her estate (only cash) to her daughter who is 13. Her will states that she wants her to receive her inheritance when she turns 21.

The amount is going to be around the £220,000 mark and I'm after some advise in setting up a fund that ensures the money is completely safe but ideally makes some money.

Does anyone have any advice? Ideally I want it to be as straight forward as possible and would like to set up my other sister in law as a trustees too.

Thank you

Dird

I was just about to post a similar themed thread so hope I can add an extra question on here:
Is it possible to transfer a S&S ISA from adult to child (nephew) or only to spouse/partner?
If not then are you able to set any conditions you want for a trust fund? e.g. only available after graduating from uni

xylophone

I assume that your late sister -in law had her will drafted by a solicitor.

Have you established what type of trust this is? Ask the solicitor.

https://www.gov.uk/trusts-taxes/types-of-trust

Is the Trust in any sense discretionary?

Does the wording indicate if she reaches 21 or when she reaches 21?

See http://www.prescient-financial.com/docs/Bare%20trust%20returns.pdf

Assuming that the cash has been left to your niece without contingency (the cash is hers now but she has no access to the capital until she turns 21 (indefeasibly vested)- then the Trustees hold the cash in absolute (bare) trust for her.

The bare trust means that your niece has the absolute right to the capital and income arising from the trust which is taxed on her personally - she has the full personal tax allowance and CGT allowance if required) to use against this income.

However, a beneficiary of a bare trust does become entitled to access and control at the age of 18 (16 in Scotland) - the money can still be held in bare trust and managed by the trustees but presumably with the consent of the beneficiary - you will need to check this point with the solicitor.

Does the will give any power of investment to the Trustees or does it specify that the money should be held in cash deposits?

If the Trustees have power of investment you may need to take advice from an Independent Financial Adviser.



https://www.caterallen.co.uk/solutions-for-trusts may be of interest.

xylophone

Is it possible to transfer a S&S ISA from adult to child (nephew) or only to spouse/partner?
If not then are you able to set any conditions you want for a trust fund? e.g. only available after graduating from uni

Re spouse inheritance of additional ISA allowance - see

http://www.nationwide.co.uk/support/support-articles/manage-your-account/isa-inheritance/isa-inheritance-about

http://www.hl.co.uk/investment-services/isa/additional-permitted-subscription-aps

A person could bequeath the investments held in his ISA to his nephew.

Anybody wishing to create a Trust in his will should take the advice of a solicitor expert in wills and trusts.



http://www.step.org/advice-information

https://www.gov.uk/trusts-taxes/types-of-trust

http://www.inheritancesolutions.co.uk/trusts/what-are-the-different-types-of-trust.html

dee342

The will was set up on her death bed with witnesses. It just states that all he estate goes to her daughter and she can receive it when she turns 21. I really after the lowest cost option as I've spoken to an IFA who is looking to charge us £30,00 over the lifetime of the policy.

xylophone

£30,00 over the lifetime of the policy.

What policy? Do you mean that you have been advised to set up some kind of investment bond?

xylophone

You have checked with a solicitor expert in wills and trusts that this is a bare trust and that the money has been "indefeasibly vested" in the child?

You have read the links in 3 above?

See also http://www.osborneclarke.com/connected-insights/publications/the-powers-and-duties-of-bare-trustees/

xylophone

And you are sure that you have consulted an Independent Financial Adviser?

https://www.unbiased.co.uk/