Holding/Investing money in Trust for children

xylophone

'Personal Trusts' which means that if, when the child reaches the age of 16, I want to remain as a Trustee on the account, I will share half of the tax liability... so that's not really an option...

I have never heard the like.

https://www.boltburdon.co.uk/yourlife/wealth-planning/trusts/bare-trust/

A Trustee is completely separate from a beneficiary.

In essence, this money is a bequest to each child.

Each child is now the owner of this money because the money is indefeasibly vested.

The interest is taxable on each child (as the money has not been given by a parent).

The Trustee is not the beneficial owner nor is the interest taxable on him either before or after the child is 16.

Have a look at this from Santander

https://www.santander.co.uk/csgs/StaticBS?ssbinary=true&blobkey=id&blobcol=urldata&SSURIsscontext=Satellite+Server&blobheadervalue1=application%2Fpdf&blobwhere=1314015810000&SSURIsession=false&blobheadervalue2=inline%3Bfilename%3D621%5C917%5CBANK0525MAR14HT.pdf&SSURIapptype=BlobServer&blobtable=MungoBlobs&SSURIcontainer=Default&blobheadername1=content-type&blobheadername2=Content-Disposition#satellitefragment&maxage=3600


If the 123 Mini Account (in Trust) remains in trust until the child reaches the age of 18, you
understand that the account will continue in trust on the same terms and conditions but with a
reduced interest rate. Santander will provide more information once the child reaches the age of
18. If at any time you want to know more about what will happen, you can contact us.

xylophone

https://www.bathbuildingsociety.co.uk/media/transfer/doc/trust_application_12_13.pdf

https://www.bathbuildingsociety.co.uk/savings/personal-savings-and-investments/supersaver

I wonder would the above be worth investigation?

xylophone

See also https://www.moneysavingexpert.com/savings/child-savings-tax-free

The Cambridge Building Society pays 2% AER fixed for three years on balances from £1,000 to £20,000, though you can only make one deposit and can't add to it.

Think carefully before getting a fixed account, as rates are higher on most of the accounts above – the only reason to open this is to lock the cash away.

Need-to-knows
The account can be opened by a parent or guardian, who must be in charge of it until the child reaches 18.
You must open the account by post or phone.
You can deposit a maximum of £20,000.
Early withdrawals and account closures aren't permitted.
Interest is paid annually on 31 December.
Cambridge BS has the full £85,000 UK savings safety guarantee.

IanManc

slewis88 wrote: »

Hi
For your info, I just spoke with Virgin Money.
They told me that their Young Saver accounts cannot be opened as 'Will Trusts', but 'Personal Trusts' which means that if, when the child reaches the age of 16, I want to remain as a Trustee on the account, I will share half of the tax liability... so that's not really an option...

The Virgin Young Saver account web page says:

"The Virgin Young Saver account will be automatically transferred into an appropriate adult savings account on 5th April, following the child’s 16th birthday.
We’ll ask you whether you want the account to retain the trustee status."

So you have choice when the child is 16 whether you want the account it turns into remaining a trustee account.

And what you were told about being liable for half the tax is just plain nonsense. Trustees aren't taxed personally for the income of a trust unless they are, for some bizarre reason, attempting to hold a bare trust for themselves (!); or unless they are a parent and they have contributed the money in the trust which is in the name of their child and it produces more than £100 a year in income - neither of which apply in your case.

slewis88

Hi thanks very much for all the information.
I don't fully understand the distinction, but the guy from Virgin Money went to great lengths to explain that their child saver account was not a Trust account and not appropriate for money bequeathed to a child, as at the age of 16 - when the child become an 'adult' - the account simply becomes a joint savings account with the 'Trustee' if the Trustee wants to remain as such, and therefore there is a joint tax liability (ie it is not a Trustee account in the formal sense and therefore the tax treatment would be different..?).
In any case, the Bath Building Society account above looks like just the ticket! I will call them tomorrow, many thanks for finding that.
(PS: I couldn't get the Santander link above to work, but in any case, the maximum amount you can put in to the mini 123 account - and get paid interest - is £2000, so its not so much use to me)

xylophone

but in any case, the maximum amount you can put in to the mini 123 account - and get paid interest - is £2000, so its not so much use to me)

You are not confined to just one account in Trust per child.

slewis88

The criteria for Santander's 1I2I3 Mini Account (in Trust) includes the following:
- Account must be opened and operated in trust for a child under the age of 11.
- On current accounts held in joint names, each account holder is eligible to be a trustee, but only one
named trustee is permitted on the 1I2I3 Mini Account (in Trust) – i.e. it is not possible to have more than
one trustee set up on the account.
Only one account per child may be held, which may be either the 1I2I3 Mini Account (in Trust) or the 1I2I3 Mini Current Account (but not one of each). If one or either of these accounts is already held and another application is made, it will not be accepted and the applicant will be informed that an account already exists. For example, if you are a trustee of a 1I2I3 Mini Account (in Trust), we will disclose the existence of that account to the child or another person applying on behalf of the child. This is because we need to explain why another account cannot be opened for the child.

So - I need (1) an account for children over 11, (2) Two Trustees are needed on each account and (3) I need to invest approx £31,000 per child and it says above 'Only one account per child may be held' (and the maximum amount is £2000).

However, the Bath Building Society option above looks good and I will call them tomorrow, but the maximum amount I can deposit per child into those accounts is £15,000 (and only one of those accounts can be opened per child) so if you know of other similar accounts - that I can open alongside these that information will be very gratefully received! Many thanks again!

xylophone

From the details you have given of the terms of the will, ( check with the solicitor) it might be possible for one of the children's parents to give good receipt for the funds and for the parent to be the Trustee for the child.

Is the Cambridge account still available?

xylophone

Do you or the parent have (or are you prepared to open) a Nationwide Account?

https://www.nationwide.co.uk/products/savings/smart-limited-access/features-and-benefits

For the 12 year old, the full CTF subscription might be made, the account transferred to Coventry JISA and the full JISA subscription made.

The balance might be deposited in Smart and the JISA subscription for 18-19 taken from it in that tax year.

The full JISA subscription for subsequent years could be taken from Smart.