Savings account held in trust for a child who has inherited

draculou

Hello
I hope someone can help.  We are dealing with the estate of my uncle who has left his estate to be divided between 4 nieces. 1 of which is 15 and living in Australia.  We are looking for an account where the money can be held in trust but not in the names of the parents. (inheritance is around £60,000

There is also a niece that is 22 however would be looking for an account to hold trust till she is 25. (parent not an option )

We don't want to be paying management fees as it would be a savings account 

Google is leaving me feel frustrated as can only seem to find the government trust fund (Voucher) info? 

doodling

Hi,

Does the will create a single trust for all nieces or is it one trust per niece?

If it is one trust per niece, what happens in the event that a niece passes away before they reach 25?

The above questions are an attempt to work out whether the nieces can insist on the money at age 18 - if they answers are "one trust per niece" and "it goes to her heirs" then they can and you need to bear that in mind, it also simplifies the answer as a Junior ISA is probably the best bet, at least for the UK based nieces - this prevent withdrawals until the age of 18.  There is no tax to worry about but you would need the support of a parent or guardian to open it (maximum annual deposit is £9k so you'd need to spread over two years).

If the money has to be held in trust until the age of 25 then I think you (or someone) is stuck with acting as trustee until the children reach that age with the money held in whatever account you feel is appropriate (ideally in the name of the trust, but in the name of the trustee is fine too providing it is traceable).  The trust will need to pay tax, assuming that the money grows in some way.

The trustee needs to ensure that (1) they understand their responsibilities, (2) they invest prudently in line with those responsibilities and (3) (in the latter case above) they pay appropriate tax on any income or capital gains.

I'm not sure that a saving account (presumably paying a paltry rate of interest) would be a prudent choice for money with a minimum three year investment horizon in these times of high inflation, but you'd need to seek appropriate advice on that.

Keep_pedalling

The wording of the will is crucial as pointed out above. If the money has been left absolutely to the beneficiaries then the minor will be entitled to their inheritance when they reach 18, and the 22 year old is entitled to it now.

Many will have these clauses that are in effect just wishes, as in reality it is difficult and costly to hold money in trust for many years unless we are talking a substantial amount of money. 

Assuming you need a bare trust for the 14 year old then where to put the money is tricky, 4 years is a very short term for investments and cash is vulnerable  to inflation.

thegreenone

Is it £60k each or £15k each?

Marcon

draculou said:

Hello
I hope someone can help.  We are dealing with the estate of my uncle who has left his estate to be divided between 4 nieces. 1 of which is 15 and living in Australia.  We are looking for an account where the money can be held in trust but not in the names of the parents. (inheritance is around £60,000

There is also a niece that is 22 however would be looking for an account to hold trust till she is 25. (parent not an option )

We don't want to be paying management fees as it would be a savings account 

Google is leaving me feel frustrated as can only seem to find the government trust fund (Voucher) info? 

A 15 year old (or any minor) is too young to give 'good receipt' for the money. Unless the will dictates otherwise, pay to the parents in exchange for an undertaking that they'll do the necessary in terms of using the money for her benefit or investing until she reaches 18 (at which point the child could apply to have the terms of the trust overturned and the money released - but again, depends on what exactly the will says).

doodling

Hi,

Marcon said:

draculou said:

Hello
I hope someone can help.  We are dealing with the estate of my uncle who has left his estate to be divided between 4 nieces. 1 of which is 15 and living in Australia.  We are looking for an account where the money can be held in trust but not in the names of the parents. (inheritance is around £60,000

There is also a niece that is 22 however would be looking for an account to hold trust till she is 25. (parent not an option )

We don't want to be paying management fees as it would be a savings account 

Google is leaving me feel frustrated as can only seem to find the government trust fund (Voucher) info? 

A 15 year old (or any minor) is too young to give 'good receipt' for the money. Unless the will dictates otherwise, pay to the parents in exchange for an undertaking that they'll do the necessary in terms of using the money for her benefit or investing until she reaches 18 (at which point the child could apply to have the terms of the trust overturned and the money released - but again, depends on what exactly the will says).

Given that the will seems to establish a trust, it is likely that it also identifies trustees (or they are by default the executors). In that case giving it to the parents will need careful consideration as ultimately it will be the person the will identifies as trustee who is on the hook if the parents fail to look after it. (Of course, they can in turn claim it back from the parents but if the parents have no money because they've spent it all then guess where the buck will stop).

It can be quite difficult to escape the responsibilities of a trustee once you've taken them on (and the executor may have taken them on by default as part of the executor role).

draculou

Thanks all.  there is no trust /trustees named however the executor is concerned that there would be nothing left for the child when she turns 18/21 or preferably 25.  

Marcon

draculou said:

Thanks all.  there is no trust /trustees named however the executor is concerned that there would be nothing left for the child when she turns 18/21 or preferably 25.  

Provided the executor pays to a responsible adult, with a written undertaking as I've suggested above, then that discharges both legal and I think moral responsibilities.

doodling

Hi,

draculou said:

Thanks all.  there is no trust /trustees named however the executor is concerned that there would be nothing left for the child when she turns 18/21 or preferably 25.  

Slightly confused about this. If the will doesn't create a trust then why are you planning to hold onto the money until they are 25? If it is a plain bequest then they are entitled to it now if over 18, or it can be held in trust until they are, for which a Junior ISA in their name appears ideal.

If the will does create a trust (or several) then the odds are that the executors are the trustees.

What exactly does the will say?

Keep_pedalling

draculou said:

Thanks all.  there is no trust /trustees named however the executor is concerned that there would be nothing left for the child when she turns 18/21 or preferably 25.  

If the will does not set up a discretionary trust or have a clause that diverts the bequest to someone else should the beneficiary not survive until they reach the age of 25, then any trust used will be a bare trust and the beneficiary will not only be entitled to the money at 18 they will also be responsible for any tax associated with it, so the executor should simply pay the money over to the 22 year old without delay.

If they have concerned about the honesty of the 14 year old’s parents then they should be put the money in trust until she reaches 18 then pass to her.