Will Trust Query

AndrewKent82

Hello,

Apologies if this has been asked previously, but my brother and I have been appointed as executors of our fathers will and are in the process of selling house, etc.

The will states that proceeds are to be split 4 ways:

25% to me
25% to my brother
25% to my sister
25% in trust to 3 grandchildren who were alive when he died

The questions I have are in relation to the trust element.
What needs to happen practically here? We will be looking to create 3 accounts for each grandchild, but do we require a trust deed to be established, or is the will sufficient? I assume that we will also need to setup 3 bank accounts to initially hold the cash prior to investment?

Regards
Andrew

AndrewKent82

Should also have pointed out that my brother and I are also appointed trustees

xylophone

25% in trust to 3 grandchildren who were alive when he died

You need to establish the type of trust that has been created.


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


Have the bequests "indefeasibly vested" in the three children?

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

If so, you will open accounts in bare trust for each child who will have the legal right to access and control at the age of 18.

Any income arising from deposit/investments belongs to each child individually and is taxable on him.

Each child has his own dividend/ income tax allowance(s) and CGT allowance as would an adult.

All the cash arising from the sale of the assets of the estate can initially be held in the Executors' Account - the executors can then pay the appropriate amount into a trust account for each child.

AndrewKent82

Thank you for your response, so the will DOES NOT state this.

However it does say that we can pay out at our discretion to the grandchildren before they reach 18.

We are wondering whether doing that, and allowing management by parents would be the simpler and more tax efficient. Since the value of each share is only around £26k.

Andrew

xylophone

DOES NOT state this.

You mean that it does not say "indefeasibly vested"?

It would not need to use those words if it is established that the money in question is an absolute and unconditional gift to each child, even though they may not control it until a future date.

Although you mention discretion, it seems that the only discretion you enjoy is whether or not to disburse the funds before the age of 18 - given that fact, (check with the solicitor), it seems to me (but no expert), that the gifts have indefeasibly vested.

It would not be difficult for you and your brother to open an account in trust for each child - example

https://www.bathbuildingsociety.co.uk/savings/personal-savings-and-investments/how-to-open-an-account-for-a-child-with-bath-building-society

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

A better interest rate could be obtained on a JISA but the amount that could be subscribed each year is limited - however, as Trustees you could release the relevant amount to a JISA each year.

https://www.coventrybuildingsociety.co.uk/consumer/product/savings/children/junior-cash-isa.html

AndrewKent82

Thank you. Having read through the will again, and other material. I think that you are right.. this will be a bare trust. The discretion element states that we may pay some or all of the money to the beneficiaries before they are 18 either to them or for their benefit.

The issue is quite sensitive as one of the grandchildren is a child of my sister, who is not named as a trustee (and also not an executor!). We are unsure whether we should pay out that share of the trust in full to an account in the name of theit child and let them make financial decisions about their child's money. It appears that that is possible from reading the will. I work in the investment sector so am also keen to maximise our childrens share (who are the other two children involved) as I believe I can invest this suitably. My brother (other trustee) has already said that he will out the money in premium bonds 😵) clearly not ideal given kids are 0, 2 and 7!

Given the relatively small value of the trust, winding up the trust at outset seems like it maybe the best option?

Andrew

xylophone

It is possible to open an investment account for a child in trust.

Example

https://www.hl.co.uk/investment-services/investing-for-children/junior-investment-account

The appropriate amount could be moved into a JISA each year.

Do all three children have JISAs?

https://www.gov.uk/junior-individual-savings-accounts

The JISA can be split between cash and stocks and shares if desired.

xylophone

The issue is quite sensitive as one of the grandchildren is a child of my sister, who is not named as a trustee

Without wishing to be indelicate, is there any particular reason why Grandpa did not name your sister as Trustee for her child?

Perhaps she might like to consider your releasing a full year's subscription to an investment/cash JISA for her child each year?

You and your brother could hold the balance in an account like the Bath Child Account?

AndrewKent82

Good question - she had a history of making some bad financial decisions in the -future- PAST!; but it's all changed now as she has recently had a child, married and is settled down. Plus her husband would not let her be so reckless!

AndrewKent82

Thanks for other responses too; do you think that it would be prudent to seek confirmation of my interpretation of the will before making any decisions? What would should i be looking to pay for such a service?

The exact wording of the will is:

"25% for my grandchildren who are living at my death in equal shares absolutely..."

"While a beneficiary under this clause is under 18 , my Trustees:

* may pay the income from the beneficiary's share of the Trust Fund to that beneficiary or use it for his or her benefit
...
While a beneficiary under this clause is under 18, my Trustees may pay some or all of the capital of the beneficiary's share of the Trust fund to the beneficiary or use it for his or her benefit"

Whilst i'm not looking for your legal advise, your personal opinion would be appreciated. This is a bare trust right?

One further question: I have an executor bank account, we are in process of selling the house.I assume that proceeds can be paid in here (where other cash from the estate resides) and then from there invested as appropriate?

Thanks again
Andrew

xylophone

25% for my grandchildren who are living at my death in equal shares absolutely...

"

This seems to me to be a bare trust because there can be no more beneficiaries under this clause and the will states that these are absolute gifts.

The testator recognised that normally the bequests would be held and controlled by the Trustees until the beneficiaries reached the age of 18 but wished to give the Trustees the right to release the capital/income earlier than this if it was required for the benefit of the grandchild(ren).