Inheritance

Invest987

My children have inherited £550,000. I now have to choose who to manage this money, the three options are Halifax and Schroders Wealth Management, RBS and Coutts Wealth Management or an independant Tax Specialist / Accountant and Financial Planner. What will they provide to me? Any experience out there as I am confused. 

My wishes are that whoever looks after this money that when they are 25 in 7 years time they will be able to take over that relationship and be advised on all choices of withdrawals in terms of Tax implications and the overall position they are in. This money was for education and property investment. 
I also need a really simple explantion of types of trusts. I had some lovely advice back in September but can we revisit it please. Thank you. 

gary83

how old are the kids now? Who decided that they don’t get control of their money until they turn 25? (If it was intended as a gift for education purposes why wait until 25?) 

ratechaser

Hello again - might be worth keeping to your original thread for continuity? 

I assume that the property has now been sold and the £550,000 is now sitting somewhere in cash? Did you get to the bottom of the precise terms of the trust in the will, as I think there was still some question over whether or not your children should be entitled to this inheritance at 18 - would be good to close the loop on that.

I'll leave it to others to comment on the 3 choices you mention but can I ask how you arrived at them as being the only realistic options for this money?

All the best - your children are very fortunate!

gary83

here’s the original thread;

https://forums.moneysavingexpert.com/discussion/6177235/inheritance-for-my-children/p1

I’m afraid I’m going to disagree with your view. the money was left to your teenage kids, you were entrusted with it until they become adults at 18? If that’s the case then personally you have to hope you’ve brought them up & educated them to understand & respect the value of the money & in particular where this came from, At some point they’re going to have to be trusted. It’s their money, not yours to gift after they’ve negotiated the first 7ish years of their adult life, I think your original plan of keeping it a secret from them could potentially bring a lot of resentment & after all what’s stopping them going off the rails and blowing it all at 25 anyway? 

Was this originally set up in your uncle’s willas an 18-25 trust? Discretionary trust? Was the age stipulation his wishes or yours?

Invest987

Thanks, not a user if this forum normally so couldn't see the original. They are 18 and 16. I think my inital posts were very emotional as I was overwhelmed but the below was always my uncles wish. 

So the will was a discretionary  stating that they would inherit the money at 25 The money was for education and property. The  two executors could make decrectionary decisions before the age of 25. I cetainly will not be standing in thier way if they have some constructive plan before that age but as I said this money is for growth, either self being or property. I have a great relationship with him and would like to think they understand that when thd time comes but like you say it is thiers not mine. 

Bobziz

That doesn't sound like a discretionary trust, are you sure that's the case ?

Invest987

After my original post I asked my solictor and she said yes. Interested to hear why you think not. As I always say I am a novice so all advice welcome.  

Bobziz

I too am a novice , albeit with a little experience in discretionary Will Trusts, having dealt with my late father's recently. It is my understanding that it is at the discretion of the trustees as to who, how much and when they assign funds to individuals within the class of beneficiaries as set out in the Will. There may be a non legally binding letter of wishes, but the trustees could ignore this if they felt it appropriate. 

Bobziz

Also worth mentioning, that as a Trustee you have certain legal responsibilities in how the trust is managed. Trust taxation is a minefield too. The advice that you were originally given by @xylophone is sound. Are you the only Trustee ?  This guide may be helpful-https://www.oldmutualwealth.co.uk/siteassets/documentso/customer-guide-and-brochures/6867_a_guide_to_investment_for_trustees.pdf

Malthusian

Tied (aka restricted) advisers like RBS / Halifax / Schroders / Coutts will only be able to recommend their own firm's products. The advantages of consulting a tied adviser instead of an independent one are nil. The best way to find an independent financial adviser and accountant is a personal recommendation. (You could try asking the solicitor if you trust them, as solicitors and IFAs often refer between each other - it is good business and a good service to their clients if they can help them find quality professionals in other fields.) Failing that you could look on some local directories, find a few you like the look of and ask for an introductory meeting.

If the two children are the only potential beneficiaries of the trust, they will be able to wind it up when the youngest turns 18 if they are both compos mentis. (If Scots law applies they can do so now as they are both over 16.) If there are other potential beneficiaries that may not apply. The trust's solicitor will be able to confirm for sure.

That being the case, the wishes of the beneficiaries must be taken into account in deciding how the money should be invested. If they are going to spend the money in 2 years time the only prudent investment would be cash, but if the money might be invested for another 5-10 years until one of them wants to buy a house, it would be sensible to look at longer term investments.

It may also be sensible to at least start moving funds into their own names as Trusts pay penal rates of tax on income and gains - are they using their ISA allowances, for example? This is the kind of thing you (plural you) really need personalised independent advice on.

xylophone

So the will was a discretionary  stating that they would inherit the money at 25 

Are you sure that this is discretionary?

It really is vital that you establish this for tax reasons. The mention of age 25 does not necessarily mean that a discretionary trust has been created.

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

You need to ask a solicitor expert in wills and trusts whether the money has "indefeasibly vested" in the children.