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Discretionary Trust

valueman1
Posts: 138 Forumite

I am planning to set up a discretionary trust for my children. As the settlor I understand I can be one trustee (for the remainder of my lifetime) and I will need to appoint a second trustee. I would like to appoint a professional to do this, but imagine many lawyers/ accountants charge high fees. Are there any low cost operators providing trustee services?
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valueman1 said:I am planning to set up a discretionary trust for my children. As the settlor I understand I can be one trustee (for the remainder of my lifetime) and I will need to appoint a second trustee. I would like to appoint a professional to do this, but imagine many lawyers/ accountants charge high fees. Are there any low cost operators providing trustee services?
You would need to define what you mean by 'low cost', as a low cost in the context of in the context of a £50k trust might consider that some nominal £500 fee each year would eat into the returns, while £1-2k a year would barely impact a £1m trust, being less than the investment platform fee or investment advice fee.0 -
Thanks for your comments.
The trust would be invested in a passive accumulating index fund, probably Vanguard or Fidelity so little to do on the investment side. This would be a compliance role generally although at times dealing with requests from the beneficiaries. I would only allow funds to be drawn by way of a loan charged against a beneficiaries property to preserve the capital. I won't be sharing the sum on a public forum!0 -
valueman1 said:I won't be sharing the sum on a public forum!5
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I'm sure there are plenty of hackers who would be interested, underestimate their ingenuity at your peril.0
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The trust would be invested in a passive accumulating index fund, probably Vanguard or Fidelity so little to do on the investment side.Once you were gone, the professional trustees would have a duty to ensure that the capital was invested prudently on an ongoing basis.I would only allow funds to be drawn by way of a loan charged against a beneficiaries property to preserve the capital.Based on the information in your post ("for my children") the children would be able to wind the trust up and share the capital between them if they were all over 18 and compos mentis.Given that the trustees will be responsible for saying "yes" or "no" to requests for capital from the children, judging the merits of their requests and ensuring the security of the trusts' loans to them, which is not a job that I would wish on my worst enemy, I cannot see why anyone would want to entrust this job to the lowest bidder.2
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valueman1 said:Back to my actual question, are there any low cost operators providing trustee services?Yes: your children would probably do it for free.To come at it another way: why don't you just divide your assets among your children in your will, without any trust (unless any are still minors)? Or make gifts to them now? Or a bit of both? What are you trying to achieve?0
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I would state other beneficiaries in addition to my children to avoid them agreeing to wind up the trust and my letter of wishes would set out my preferences. When my kids want to buy a home in the future the trust would lend them the money. If they married and then divorced the money would return to the trust upon sale of the home. So what I'm trying to achieve is wealth preservation. At 18 years old they may be tempted to spend the money frivolously, this way the money will enable them to buy property and will only be available to them by way of a secure interest free loan on their home. This will give them a huge head start in life.0
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I think the suggestion to make your children the trustees was in jest.
There is no way to do a discretionary trust on the cheap. They get seriously complicated and you will almost certainly need a lawyer to set it up.
Amongst other paperwork you will have to do inheritance tax assessments every 10 years. You say you are planning to allow borrowing from it. That's a potential huge headache for a trustee.
The only cheap trustees would be relatives, but if they have any sense they will say no!1 -
Why not stop trying to control your family from beyond the grave?
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