Accounts for Trustees to manage

HappyTaffy

As Grandparents we are looking for advice regarding suitable interest bearing current and savings/deposit accounts which we can setup and operate as Trustees, along with our son and his wife as Trustees.  

We need to have accounts to deposit a regular monthly income of around £1,500 in connection with a Bare Trust holding a rental property for our 6-month-old  Granddaughter.  

The accounts will need to be in the Trust name with us as the account holders.  

Our Granddaughter will be submitting an annual HMRC SA100 Tax Return and she will not be able to have control of the accounts until age 18.

My understanding is that they need not be special Trustee accounts but need to known by the Trust name.  The accounts must be suitable to hold around £15,000 p.a. so we believe most children's savings accounts wont be suitable.

It seems to be difficult to find banks that offer these accounts from preliminary enquiries.  Any guidance would be appreciated.

Brie

Frankly I'd suggest you talk to a solicitor who knows about trusts rather than to people on a website.  Your situation sounds like it may be complicated and be based on you all being quite wealthy.  I know that there's been a lot of changes about Trusts and how many of them set up in the past are worthless or unworkable.  And I doubt that you neither want to waste your money or have your grand daughter end up with something that is a burden.  It may be because of these considerations that most banks won't deal with any of this for you.

Keep_pedalling

I would look at putting some of that amount of that in a JISA, so at least some of her trust is protected from IT and CGT.

May I ask why you chose property rather than investments which would be easier to manage and don’t take away her first time buyer status before she has learned to talk.

HappyTaffy

Keep Pedalling - Thank you for your comment
To run the Rental you need working accounts but this doesn't stop you from having other accounts such as the JISA, which has a £3,000 p.a. cash ISA limit.  We are aware of the £6,000 stocks & shares top up.
If I had a couple of days to spare instead of trying to make the best of a life times hard work and still working daily in both a manual and sedentary role at 80, I would gladly explain why property rather than capital.  However, in short, Capital won't give a ROI of 20% (exceptional in this particular case but no good to us when dead) with both capital growth and rental growth.  That return ignores all the renovation working hours and effort  put in by myself and my son. Hopefully, like our son, by her early teens she will have a great understanding of how business works and will develop a work ethic to be proud of, gain an understanding of how to provide good service for her tenants and learn to appreciate the difficulties that some less fortunate than her experience when making their way through life.

HappyTaffy

Brie - Thank you for your comment.
Like you, we are sceptical about Trusts but a simple Bare Trust is easy to administer and non contentious providing you keep correct and detailed records, pay any required taxes and wisely invest the income for the Beneficiary.  The investment will not be a burden with experienced and hard working Parents and Grand Parents with 50+ years of relevant experience and able to invest wisely.

xylophone

 See   https://www.gov.uk/guidance/register-a-trust-as-a-trustee


I'd suggest that you consult a solicitor with expertise in Trusts and conveyancing.

https://www.step.org/about-step/public


The child cannot hold the property in her  own name - therefore it will be registered in the names of the Trustees as legal owners 


(in effect nominees for the beneficial owner ).

The conveyancing solicitor will advise on this aspect which has its own complexities.

You might find that Metro Bank would offer a Trust current account to receive the monthly income.

The Trust will be a Bare Trust - income is taxable on the beneficiary who has standard Personal and CGT Allowances.

The parents could open a JISA for the child - the Trustees could choose to transfer £9000 a year of Trust Income to the JISA.

The stocks and shares option might be the better choice as the child is so young.

The parents may also open a savings account in trust for the child to which the balance of the income could be transferred

Example

https://www.skipton.co.uk/savings/childrens/childrens-trust-saver


Remember that the child will have the absolute legal right to access and control at the age of 18 of any Bare Trust account and of

a JISA.


Be sure that you are completely content with this before embarking on this path.

Your solicitor could suggest other options.

HappyTaffy

xylophone thank you for your Post

Sorry for the delayed response but rather a busy few days working and trying to avoid tripping over Maid Marian and Robin Hood as time is running out.

Everything in your post is good and we are on top of all your suggestions and pointers.  Skipton, who we had spoken with, were helpful but their weakness was that the account must be opened with £10k, whereas the first month's income will a little over £1.2K.  

I think we may need to try for Nominee accounts, as most institutions seem to have dropped Trustee Accounts.  Wasn't it great when there were real Bank Managers who are now more rare than mummified Pharaohs.

We have experience of successfully using a Bare Trust previously,  Highly tax efficient but a little worrying in the early years without a crystal ball as youngsters navigate their teenage years.  With the right guidance it can turn out to be highly rewarding and an incredible launchpad.

HobgoblinBT

Why not hold it in separate current account, “happy taffy” re “child of taffy” until you can build sufficient balance to open a “proper” trust account?

xylophone

Skipton, who we had spoken with, were helpful but their weakness was that the account must be opened with £10k, whereas the first month's income will a little over £1.2K.

Have the Terms changed?

https://www.skipton.co.uk/savings/childrens/childrens-trust-saver

• The account is available to UK residents only and can be opened and managed in branch or by post.
• Until the child turns 18, a parent, grandparent or close adult relative can open the account and would be the account trustee.
• The trustee(s) are the account holders and hold the money in trust for the benefit of the child. The child will be the beneficiary.
• The minimum opening and operating balance for this account is £1. You must keep at least this amount in the account at all times.
• Subsequent payments in can be made from £1.
• The maximum balance for this account is £50,000.
• Only one child can be the named beneficiary on the account.
• You can only hold one Children’s Trust Saver per child.

HappyTaffy

xylophone - thank you for your comment.

You appear to be correct according to their website.  However, I went onto Chat, on Monday or Tuesday and Skipton confirmed their Trust Account but said, minimum opening balance £10k.  I went back to them explaining that the initial amount available would be circa £1,200 per month.  It was then reconfirmed £10k minimum.  I will contact them again by telephone and ask the same questions.
However, we completed all the documentation today and our very experienced old school solicitor, who has been a real gem, and I have never caught him out in fifteen years, reassured us that my understanding was that we did not need an actual named specialized "Trust" account.  We can operate a dedicated account for this purpose and record full agreement between the trustees that all monies within that particular account belong to the Beneficiary and inform HMRC accordingly and complete all relevant income declarations.

HappyTaffy

Hobgoblin BT - Thank you for your comment

I think my last post to xylophone backs up your suggestion