Trust Investments

xylophone

If there is an ISA, then it can only be held in the name of an individual.

Presumably it is in the sole name of the beneficiary of the Trust?

That is to say, money was transferred from the Trust account to the beneficiary for her use as required?

She chose to deposit the cash (which now belongs to her as an individual) in an ISA account?

There is no problem with that .

However, the account, as her personal account, is no longer a Trust asset and as such no longer under the control of the joint Trustees.

If she is on means tested benefits, then this account must be declared as her personal asset.

Malthusian

MapleTrees said:

The ISA was one of the recommendations set out by the financial adviser (at a well regarded firm) in their Trust money management report. The ISA was on the Trust tax return because the ISA contained only Trust money, therefore I presumed had to be taxed as such. We relied on the expert advice given at the time so there must be a bona fide reason for it. 

The only bona fide reason I can think of is "they didn't know what they were doing".
Unless someone has got the wrong end of the stick. For example, they thought that this money had been or would be distributed to the beneficiary of the trust which they would then invest in an ISA in the beneficiary's name. 

The person who did all of this originally is no longer at the firm and the person who has handled the Tax returns doesn't seem to be the correct port of call. 

If you employed the firm to advise on these investments, not that person as a sole trader, then it's the firm's job to answer the question "Why on earth did you [the firm] recommend that trust money should be invested in an ISA?" 

The firm will then have to go back through your file and the adviser's notes and try to figure out an answer. If they can't give a better one than "we don't know", that's life.

It sounds like the accounts were set up at a time when regulations were less stringent, and the trust is in this position largely through inertia. 

MapleTrees

xylophone said:

If there is an ISA, then it can only be held in the name of an individual.

Presumably it is in the sole name of the beneficiary of the Trust?

That is to say, money was transferred from the Trust account to the beneficiary for her use as required?

She chose to deposit the cash (which now belongs to her as an individual) in an ISA account?

There is no problem with that .

However, the account, as her personal account, is no longer a Trust asset and as such no longer under the control of the joint Trustees.

If she is on means tested benefits, then this account must be declared as her personal asset.

Thank you. I believe the answer is yes to all of that. It was 2009 so hard to recall much of it, but ISA aside the Trust accounts were appropriate to the aims of the Trust and continued to be so - until recently when I had to relocate one savings account due to the building society closing, and relocate another to make it more locally accessible. This is when I scrutinized the naming protocol and felt I needed clarification.

I have the FA's report from 2009 where the ISA was recommended but I was confused to see it on the Trust tax returns, which the beneficiary dealt with directly with the FA. 

I think I need to look up a replacement FA firm who specifies expertise in Trusts so I can ensure everything is correct going forward.

MapleTrees

Malthusian said:

The person who did all of this originally is no longer at the firm and the person who has handled the Tax returns doesn't seem to be the correct port of call. 

If you employed the firm to advise on these investments, not that person as a sole trader, then it's the firm's job to answer the question "Why on earth did you [the firm] recommend that trust money should be invested in an ISA?" 

The firm will then have to go back through your file and the adviser's notes and try to figure out an answer. If they can't give a better one than "we don't know", that's life.

It sounds like the accounts were set up at a time when regulations were less stringent, and the trust is in this position largely through inertia. 

Thanks again for the answers, very useful indeed.

Yes, that was my view - the reply I got was along the lines of 'it was set up before we took over that firm of advisers and I only did some of the tax returns since then'. At this stage I wonder if they still have a person who deals with trusts. I did ask, and I asked about their fees, but didn't get a response.

I presume a layperson can set up Trust accounts (if the bank has that option). I think the first thing I'll do is to ask the high street bank where I recently moved the building society account to, in case they can help. Otherwise I will approach a new firm of financial advisers to see what their charges would be. 

xylophone

I presume a layperson can set up Trust accounts (if the bank has that option).

The Trustees can open an account for the Trust provided that the financial institution offers Trust accounts.

You might try United Trust Bank, https://www.utbank.co.uk/deposits/business-accounts/

 Buckinghamshire BS, https://www.bucksbs.co.uk/savings/trusts/

 Skipton BS, https://www.skipton.co.uk/savings

With regard to a stocks and shares account for a Trust, you may find that you need to go through a Financial Adviser.

Hargreaves Lansdown used to offer an account for Trusts but the service became unavailable during the pandemic and I'm not sure it has been offered since.

You could try

https://adviserbook.co.uk/

Tick "confirmed independent" and "Tax and Trust Planning" when the menu comes up.

MapleTrees

xylophone said:

I presume a layperson can set up Trust accounts (if the bank has that option).

The Trustees can open an account for the Trust provided that the financial institution offers Trust accounts.

Tick "confirmed independent" and "Tax and Trust Planning" when the menu comes up.

Thank you so much for that.

I'm going to contact an appropriate IFA on Monday who can give the Trust a healthcheck. I'll report back on anything of interest.

I hope they don't need to see the original Trust deed - I can no longer find it. I've always held a copy and the original sat with the beneficiary (who has moved house since then and can no longer locate it). 

MapleTrees

I have now taken advice from a recommended financial adviser who specialises in Trusts.

He has confirmed that the two savings accounts do not in fact have to be in specific Trust accounts, they just have to be in our joint names (she and I are the two Trustees) and an audit trail is sufficient. He did say that I can simply rename the accounts in the name of the Trust if I prefer.

I have also clarified the tax position and because of the minimal interest we no longer have to file returns (the small interest which is generated can be offset against the Settlor's personal allowance).

EDIT:  I've just telephoned Barclays to clarify that it's okay for money from an original trust pool to be in a savings account and they said yes, that's fine as long as the money is in the name of the Trustees (and not mixed in with personal money). I could not rename the account in the full name of the Trust because it only allows you 15 characters so I had to use an abbreviation, but that is okay as well.

xylophone

When a relative was one of the three Trustees of a discretionary Will Trust, the Barclays Current account was simply called T'tees of  (name) Will Trust.

Just use a logical abbreviation to fit? 

MapleTrees

xylophone said:

When a relative was one of the three Trustees of a discretionary Will Trust, the Barclays Current account was simply called T'tees of  (name) Will Trust.

Just use a logical abbreviation to fit? 

Yes, that's what I've just done and Barclays is fine with it.

LHW99

MapleTrees said:

xylophone said:

When a relative was one of the three Trustees of a discretionary Will Trust, the Barclays Current account was simply called T'tees of  (name) Will Trust.

Just use a logical abbreviation to fit? 

Yes, that's what I've just done and Barclays is fine with it.

And make sure you have a record of the abbreviation stored safely, because with the new checks banks make with transfers in, using the wrong abbreviation (should it have to be done any time) could add delays.