Short Term Trust Account

Mike.1886

Hi everyone

I'm hoping someone on here will be able to help with a rather specific problem I'm trying to get my head round.

My mother left my nephew around £100k in her will of which I am one of two trustees. My nephew is 22 and lives in North America. I am in the UK. The will stipulated that he should not receive the money until he reaches the age of 25 which is just over 2 years away.

I therefore want to invest the money for him until he reaches 25 which guarantees the initial investment and hopefully gives him a little bit extra.

Can anyone make any suggestions as to how I should proceed and answer any or all of the following questions:
- Should the account be in my nephews name with myself and my uncle as trustees?
- If the account can be in my name does that mean I'd be liable to pay tax on any earnings?
- Do we need to involve a solicitor (I'm hoping not to keep costs down)?

Thanks in advance for any advice.

Mike

xylophone

Has the bequest "indefeasibly vested" in your nephew who is no longer a minor?

If so, you may be looking at a bare trust see

https://forums.moneysavingexpert.com/discussion/comment/75355468#Comment_75355468

If this is a bare trust then the nephew has the right to access and control.

You will need to look at the precise terms of the will and take advice as to the nature of the Trust.

xylophone

The taxation situation also depends on the nature of the trust - see link in post above.

Reaper

I don't think a Bare Trust satisfies the age 25 stipulation as it can be immediately ended.

While I don't know much about them there is an "Age 18-25 Trust" briefly mentioned here, which may be more suitable:
https://www.gov.uk/trusts-taxes/trusts-and-inheritance-tax

The fact the beneficiary is abroad complicates things.

Unless a knowledgeable forum member can provide you with more details I think a visit to a solicitor may be necessary.

xylophone

I don't think a Bare Trust satisfies the age 25 stipulation as it can be immediately ended.

The trouble is that depending on the wording of the will, this may still be a bare trust - see link to thread in my post above.

Something else that strikes me is that depending on any trust deed, the Trustees may not have been given powers of investment and even if they had, two years would be too short a time to consider investment with the risk of capital loss.

The OP needs to take advice (qualified, professional) as to the exact nature of the Trust that has been created because of the tax implications.

xylophone

"Age 18-25 Trust"

My mother left my nephew

See https://www.fladgate.com/2016/02/making-provisions-for-minor-children-or-grandchildren-in-your-will/


Option 3: Age 18 – 25 trust (for parents only – not available to grandparents)

This type of trust can only be created by a parent making a Will containing a trust.

Mike.1886

Thanks for the replies. It all seems horribly complicated yet the solicitor who was handling the estate seemed happy that I could just open an account and they would transfer the money to it. I guess if I ask for their advice they will just want to charge more money on top of the already agreed rate for administration of the estate.

If we assume everyone is agreeable - both trustees, the beneficiary and the solicitors - does anyone have ideas where best to put the money? Just into a building society account earning interest?

xylophone

If we assume everyone is agreeable - both trustees, the beneficiary and the solicitors - does anyone have ideas where best to put the money? Just into a building society account earning interest?

As previously explained, you must establish what type of trust this is in order to establish the tax treatment - this may be further complicated by the fact that there is a non-resident beneficiary.

Read the links in my previous carefully and take professional advice if you are not sure.

See also

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm367780

but be careful about the note on the "contingent interest" because of what is said in notes below Example 1.

https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem1563

This may still be a "bare trust".

I think that you need to take professional advice from a solicitor with expertise in Wills and Trusts/an accountant with expertise in Trusts and taxation.