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Platform for Investment in a Discretionary Trust

I have experience in investing in OEICs etc in bare trusts as executor of a will. Now long retired, I wish to sell some of my ISAs and invest about £250k in discretionary trust funds for my grand children. I would prefer to use an IFA, but it seems the only way they make money is by wrapping the investment in an insurance bond, which will not be cost-effective for the amount I have available, partly because almost half the funds will be from surplus taxed income rather than capital. I can get my solicitor to draw up the deeds, but Google has been unable to identify a platform provider who will deal directly with trustees (other than of a bare trust). I am not seeking recommendations, just some names of companies who would accept my money.


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Comments

  • xylophone
    xylophone Posts: 45,426 Forumite
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    edited 26 June 2020 at 8:17PM
  • Malthusian
    Malthusian Posts: 11,053 Forumite
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    Insurance bonds cost the same as unwrapped funds on most modern platforms, give or take an extra wrapper charge here or there (which should be trivial next to the tax saving, if they are being used correctly).
    For a £125k initial investment with further funds to be added, you should have little trouble finding an IFA to advise. An IFA's fee would be the same regardless of which tax wrapper was used.
  • Dnomyard
    Dnomyard Posts: 12 Forumite
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    xylophone said:
     As  answered in your other post, Hargreaves Lansdown will deal with Trustees.
    Thanks, I'm pretty sure Fidelity do also, but there is a question of not putting too many eggs in one basket. There must be others out there, but I can't find them.
    For a £125k initial investment with further funds to be added, you should have little trouble finding an IFA to advise. An IFA's fee would be the same regardless of which tax wrapper was used.
    Thanks, I think they'll be queueing up! But if they charge a little over 1% per annum and a little more in the year when the funds go in, with 5% fund growth, fees could exceed £10k in 6 years and could eventually exceed the possible IHT. I would prefer to hire an IFA, but need something to fall back on.
  • Albermarle
    Albermarle Posts: 25,904 Forumite
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    Thanks, I'm pretty sure Fidelity do also, but there is a question of not putting too many eggs in one basket.

    I think you could say that Fidelity and Hargreaves Landsdown are safe bets .

  • Dnomyard
    Dnomyard Posts: 12 Forumite
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    I

    I think you could say that Fidelity and Hargreaves Landsdown are safe bets .

    I have so far asked Fidelity and AJ Bell, both of whom are happy to take money into a bare trust, but not into a Discretionary Trust. I am waiting a reply from HL, who are a little dearer.  Does anyone know why Fidelity and AJBell are so coy, and can you name someobe who will take the m oney without charging an arm and a leg?
  • xylophone
    xylophone Posts: 45,426 Forumite
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    Have you already opened a Trustee Bank Account?
    Have you tried Interactive Investor?
  • Dnomyard
    Dnomyard Posts: 12 Forumite
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    xylophone said:
    Have you already opened a Trustee Bank Account?
    Have you tried Interactive Investor?
    Thanks.
     I'm awaiting reply from II. The trust is not yet set up so has no bank a/c
  • xylophone
    xylophone Posts: 45,426 Forumite
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    The trust is not yet set up so has no bank a/c

    It would be as well to open a current account for the Trust and transfer in the money in order to have it available to transfer to the investment account/ ready for use should you need to make payments to beneficiaries.

    The Share Centre (taken over by II fairly recently) permitted Trust accounts - their application form stated 

    "We only accept cheques drawn on your Trust's account".

  • Albermarle
    Albermarle Posts: 25,904 Forumite
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    and can you name someobe who will take the m oney without charging an arm and a leg?

    Not sure what you feel is an arm and a leg ? Even the most expensive platform ( HL ) charges less than 0.5% and for that you will get a good customer service at least . All plus the actual fund costs as well .

    On the other hand you are assuming 5% fund growth , which may or may not happen, and any small variation in investment performance will far outweigh any small savings on platform costs.

  • Dnomyard
    Dnomyard Posts: 12 Forumite
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    xylophone said:

    It would be as well to open a current account for the Trust

    I agree -- I will need it. But I have yet to find a home for the investment... see below!

    Not sure what you feel is an arm and a leg ? Even the most expensive platform ( HL ) charges less than 0.5% and for that you will get a good customer service at least .

    One IFA quotes a minimum of £1,500 per year, another 3% of what you invest plus 1% pa on the value of the investments - in my case this would exceed £1,500 only in the initial year. HL's charges are comparatively reasonable, but they haven't fully answered my query because their offices are not fully opened  yet - It's probably the same with II who have not replied to my email. Investing in a bare trust is no problem, but a discretionary trust is a nono for Fidelity and AJ Bell.
    Thanks for your comments, Albemarle and Xylophone.

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