Account for child/minor vs. Bare trust for child/minor

itwasntme001

[Deleted User] said:

itwasntme001 said:

xylophone said:

If you are considering settling hundreds of thousands on your grandchild/grandchildren, I would strongly  suggest that you consult a solicitor expert in Wills and Trusts.

https://www.step.org/directory/members

I thought an estate planner is the best person to talk to initially.  TO decide on the best option to take.  Then go to a solicitor if needed to make sure legally it is done properly.  But I was told by a financial advisor to set up a discretionary trust you do not even need a solicitor.  The fund management company who would manage the assets would handle it all for you.

One of the issues with trusts is that there seems to be a whole bunch of salesman who sell these and get commission for doing so.  They can bluster a lot but ultimately they want you to buy an easy product rather than something that works for you.  If they use phrases like "Asset Preservation Trust" then, to me, that's a signpost to say go somewhere else.

Yes I am aware of the conflict of interest and incentives they have to push products.

I guess a solicitor is best but do they advice on the solutions?  I thought that is what planners are for?

dunstonh

itwasntme001 said:

[Deleted User] said:

itwasntme001 said:

xylophone said:

If you are considering settling hundreds of thousands on your grandchild/grandchildren, I would strongly  suggest that you consult a solicitor expert in Wills and Trusts.

https://www.step.org/directory/members

I thought an estate planner is the best person to talk to initially.  TO decide on the best option to take.  Then go to a solicitor if needed to make sure legally it is done properly.  But I was told by a financial advisor to set up a discretionary trust you do not even need a solicitor.  The fund management company who would manage the assets would handle it all for you.

One of the issues with trusts is that there seems to be a whole bunch of salesman who sell these and get commission for doing so.  They can bluster a lot but ultimately they want you to buy an easy product rather than something that works for you.  If they use phrases like "Asset Preservation Trust" then, to me, that's a signpost to say go somewhere else.

Yes I am aware of the conflict of interest and incentives they have to push products.

I guess a solicitor is best but do they advice on the solutions?  I thought that is what planners are for?

If you get advice then makes sure its an IFA.   Not an FA.   FAs are notorious for using trusts unnecessarily.  IFAs use them at times as they can be suitable in a minority of case but nowhere near to the same level as FAs.  IFAs frequently come across pointless trusts set up by certain FA salesforces that are either very difficult to unwind (in terms of cost) or beyond justifiable to unwind leaving it in place paying large fees to the original selling company.

The most common solution that works out best is gifting.   Annual gift allowance, gifts from income or straight gifting using the 7 year rule.   All of these should be used up or at least have justifiable reasons for not being used before you go into trusts.

itwasntme001

dunstonh said:

itwasntme001 said:

[Deleted User] said:

itwasntme001 said:

xylophone said:

If you are considering settling hundreds of thousands on your grandchild/grandchildren, I would strongly  suggest that you consult a solicitor expert in Wills and Trusts.

https://www.step.org/directory/members

I thought an estate planner is the best person to talk to initially.  TO decide on the best option to take.  Then go to a solicitor if needed to make sure legally it is done properly.  But I was told by a financial advisor to set up a discretionary trust you do not even need a solicitor.  The fund management company who would manage the assets would handle it all for you.

One of the issues with trusts is that there seems to be a whole bunch of salesman who sell these and get commission for doing so.  They can bluster a lot but ultimately they want you to buy an easy product rather than something that works for you.  If they use phrases like "Asset Preservation Trust" then, to me, that's a signpost to say go somewhere else.

Yes I am aware of the conflict of interest and incentives they have to push products.

I guess a solicitor is best but do they advice on the solutions?  I thought that is what planners are for?

If you get advice then makes sure its an IFA.   Not an FA.   FAs are notorious for using trusts unnecessarily.  IFAs use them at times as they can be suitable in a minority of case but nowhere near to the same level as FAs.  IFAs frequently come across pointless trusts set up by certain FA salesforces that are either very difficult to unwind (in terms of cost) or beyond justifiable to unwind leaving it in place paying large fees to the original selling company.

The most common solution that works out best is gifting.   Annual gift allowance, gifts from income or straight gifting using the 7 year rule.   All of these should be used up or at least have justifiable reasons for not being used before you go into trusts.

We have been using al the allowances etc.  There does seem to be good reason to use trusts now, because the grandparents would like to gift to grandchild and want to make sure it is protected from the child's parents in case of divorce, and I also understand a trust is th eonly option to give to a child for the amount of money (few hundred thousand).  It seems the options boil down to discretionary trust vs bare trust.

But we will get IFA to see if there are more options.  It will not cost anything at this stage.

IanManc

itwasntme001 said:

IanManc said:

itwasntme001 said:

xylophone said:

If you are considering settling hundreds of thousands on your grandchild/grandchildren, I would strongly  suggest that you consult a solicitor expert in Wills and Trusts.

https://www.step.org/directory/members

I thought an estate planner is the best person to talk to initially. TO decide on the best option to take.

Yes, and you can pay them a lot of money. And then you can go to an expert wills and trusts solicitor for proper expert advice afterwards.

Then go to a solicitor if needed to make sure legally it is done properly.

So you'll have paid twice. But at least you'll have got the correct advice from the solicitor.

But I was told by a financial advisor to set up a discretionary trust you do not even need a solicitor.

Financial advisors are just salesman. A financial advisor won't be an expert in discretionary trusts, but clearly feels qualified enough to tell someone who may be settling tens of thousands of pounds in trusts that they don't need an expert in the field. 

 The fund management company who would manage the assets would handle it all for you.

I'm sure they would - and you would pay through the nose for the privilege.

                  

Yeh I understand all that.  It is just that who do I go to for advice?  On thsi forum everyone says to posters to get financial advice as no point asking random people on the internet, especially with large sums involved.

Do solicitors give advice, I thought they just carry out legal services so you have to know what you want first?

Xylophone gave you a link to a list of solicitors who specialise in this area. They are experts in advising when trusts should - and more importantly should not - be used, and where it is appropriate can set up exactly the arrangement that is suitable for your needs, not some off the shelf package that is pushed by some spiv FA.

itwasntme001

IanManc said:

itwasntme001 said:

IanManc said:

itwasntme001 said:

xylophone said:

If you are considering settling hundreds of thousands on your grandchild/grandchildren, I would strongly  suggest that you consult a solicitor expert in Wills and Trusts.

https://www.step.org/directory/members

I thought an estate planner is the best person to talk to initially. TO decide on the best option to take.

Yes, and you can pay them a lot of money. And then you can go to an expert wills and trusts solicitor for proper expert advice afterwards.

Then go to a solicitor if needed to make sure legally it is done properly.

So you'll have paid twice. But at least you'll have got the correct advice from the solicitor.

But I was told by a financial advisor to set up a discretionary trust you do not even need a solicitor.

Financial advisors are just salesman. A financial advisor won't be an expert in discretionary trusts, but clearly feels qualified enough to tell someone who may be settling tens of thousands of pounds in trusts that they don't need an expert in the field. 

 The fund management company who would manage the assets would handle it all for you.

I'm sure they would - and you would pay through the nose for the privilege.

                  

Yeh I understand all that.  It is just that who do I go to for advice?  On thsi forum everyone says to posters to get financial advice as no point asking random people on the internet, especially with large sums involved.

Do solicitors give advice, I thought they just carry out legal services so you have to know what you want first?

Xylophone gave you a link to a list of solicitors who specialise in this area. They are experts in advising when trusts should - and more importantly should not - be used, and where it is appropriate can set up exactly the arrangement that is suitable for your needs, not some off the shelf package that is pushed by some spiv FA.

Yes noted thank you.  We won't be taking out any products or services from FAs or even IFAs.  Just gathering information on options.  We will look for a STEP solicitor for advice if needed.