Setting up a bare trust account for child

DRS1

itwasntme001 said:

The HL bare trust account only allows for one settlor.  They do not allow you to add additional settlors, even with another page etc.  If both grandparents are gifting the money via a joint account, is it ok to put just one of the settlors and is there anything to consider with this?  Such as for example IHT implications?  Or would the gift still be considered coming from a jointly (i.e. 50-50) and having just one settlor has no impact whatsoever?

If you have two people giving money then I think you should have two separate trusts.

itwasntme001

DRS1 said:

itwasntme001 said:

The HL bare trust account only allows for one settlor.  They do not allow you to add additional settlors, even with another page etc.  If both grandparents are gifting the money via a joint account, is it ok to put just one of the settlors and is there anything to consider with this?  Such as for example IHT implications?  Or would the gift still be considered coming from a jointly (i.e. 50-50) and having just one settlor has no impact whatsoever?

If you have two people giving money then I think you should have two separate trusts.

HL have said they only allow one bare trust per beneficiary.

The question is how does the fact that there is only one settlor, despite both grandparents gifting the money, impact probate/ IHT?  Would it be seen as only one person (the settlor) gifting the money, or since the money originated from joint account or sources it would still be seen as a gift from both grandparents?

Reaper

itwasntme001 said:

The question is how does the fact that there is only one settlor, despite both grandparents gifting the money, impact probate/ IHT?  Would it be seen as only one person (the settlor) gifting the money, or since the money originated from joint account or sources it would still be seen as a gift from both grandparents?

HMRC would treat it as 2 bare trusts for IHT purposes; one for each grandparent. Potentially with different start dates, though in this case that is not an issue.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm42253#

itwasntme001

Reaper said:

itwasntme001 said:

The question is how does the fact that there is only one settlor, despite both grandparents gifting the money, impact probate/ IHT?  Would it be seen as only one person (the settlor) gifting the money, or since the money originated from joint account or sources it would still be seen as a gift from both grandparents?

HMRC would treat it as 2 bare trusts for IHT purposes; one for each grandparent. Potentially with different start dates, though in this case that is not an issue.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm42253#

Thank you for this.

Makes sense then to continue with the HL bare trust with just one settlor included, as HMRC will see it as two separate bare trusts one for each grandparent.

itwasntme001

I have a couple more questions regarding the TRS registration.

1) Given HL only allow one settlor, but there are in fact two settlors (initial gift from one, but future gifts from 2 settlors) what would I need to put in the TRS registration?  I am able to include more than one settlor.  If two included, wouldn't this be inconsistent with the HL applicaiton and deed, and would there be problems with this?

2) There is no tax liability expected as the beneficiary's tax allowances will be utilised.  There might be CGT to pay in future, but not expected to for a few years.  For the TRS registration, would this then be a taxable trust I am setting up, or non-taxable at this initial stage of setting up (even though in future it might be)?

TIA.

itwasntme001

Having set up the bare trust and invested the money, I am wondering about the need to inform HMRC or complete a self assessment on behalf of the beneficiaries.

There will be no tax due given the amounts involved and full personal allowance available.  So we had registered the trust as non-taxable.

But I am wondering if we still need to complete a SA or inform HMRC if the income comes from foreign sources (there is an offshore index ETF - ACWI) as there is some excess reportable income.  The amounts, together with the other income such as dividends and interest on bonds, are well within the personal allowance so no tax would be due.

But would there still need to be some reporting to HMRC, particularly in the case of the foreign income?

TIA.

Reaper

itwasntme001 said:

But I am wondering if we still need to complete a SA or inform HMRC if the income comes from foreign sources (there is an offshore index ETF - ACWI) as there is some excess reportable income.  The amounts, together with the other income such as dividends and interest on bonds, are well within the personal allowance so no tax would be due.

Personally I only submit a Self Assessment if I believe there is tax to pay or the HMRC have asked me to.