TRS registration - settlors

itwasntme001

Hi,

We opened a bare trust account with Hargreaves Lansdown and have also registered the trust with TRS online.

The initial money that was deposited came from a joint account but we only put one settlor in the HL form and also corresponding one settlor in the TRS registration.  HL only allow one settlor and they said the TRS has to match the HL application form exactly.

However, since more money will be added from the joint account going forward, do we need to change the TRS details to add the second settlor (other joint account holder)?  The money is effectively from both of them.

We want to make sure things are done correctly in the TRS details, but not sure if we need to add the second settlor, or if the settlor is just the person adding the initial money (so TRS is fine as is).

Also we want to make sure there are no issues or complications with regards to inheritance tax gifting, not sure if the TRS details impact this or is irrelevant and HMRC will see the money is 50-50 during probate etc.

TIA.

itwasntme001

Just bumping this back up, wondering if anyone can answer this?

Thanks

itwasntme001

Anyone able to help?

TheGreenFrog

Bare trusts are really only trusts in a technical sense, so I would focus on the practical issues.  As you have identified, the key here is who is gifting for IHT purposes.  For the initial gift, the HL form is stating that it is from one person. If that was not the intention then I suggest you and the other joint account holder sign a document (perhaps by way of deed, as per the initial bare trust deed, which means wording saying it is a deed and signed in front of a witness) stating that the initial gift was a joint gift but the form did not allow that to be stated (or similar).  It may or may not work but is better than nothing.  For gifts after the initial amount stated in the bare trust deed you could record (preferably by way of deed executed by the giver(s)) the amount of the gift, the identity of the beneficiary and date and stating that the amount will be paid into the HL nominee account.  In practice money from any source can be held in the HL nominee account (although it may need to be routed via the joint account recorded with HL) - for IHT purposes you just need to make sure that it is correctly documented.  But if you are a parent and the beneficiary is your minor child it is better to avoid mixing gifts from parents with gifts from, for example, grandparents as the tax treatment of resultant income will be different.  For that it may be better to set up a nominee account with a different provider.

itwasntme001

TheGreenFrog said:

Bare trusts are really only trusts in a technical sense, so I would focus on the practical issues.  As you have identified, the key here is who is gifting for IHT purposes.  For the initial gift, the HL form is stating that it is from one person. If that was not the intention then I suggest you and the other joint account holder sign a document (perhaps by way of deed, as per the initial bare trust deed, which means wording saying it is a deed and signed in front of a witness) stating that the initial gift was a joint gift but the form did not allow that to be stated (or similar).  It may or may not work but is better than nothing.  For gifts after the initial amount stated in the bare trust deed you could record (preferably by way of deed executed by the giver(s)) the amount of the gift, the identity of the beneficiary and date and stating that the amount will be paid into the HL nominee account.  In practice money from any source can be held in the HL nominee account (although it may need to be routed via the joint account recorded with HL) - for IHT purposes you just need to make sure that it is correctly documented.  But if you are a parent and the beneficiary is your minor child it is better to avoid mixing gifts from parents with gifts from, for example, grandparents as the tax treatment of resultant income will be different.  For that it may be better to set up a nominee account with a different provider.

Thanks.

I am not sure what the purpose of documenting the initial money being sent jointly as opposed to sole?  Is it for HMRC purpose or to avoid penalities?  If for IHT purpsoe, the initial amount is so small that it is pretty much irrelevant whether ti comes from one or both grandparents.

My main concern is more around the TRS registration info (given heavy fines for incorrect information) - does this need to be updated to show further gifts were made by both grandparents, not just the initial settlor (grandfather)?  Going forward large gifts will be made by grandparents only.  It will come out of their joint account.  Presumably just keep records in a spreadsheet that this has been done along with the record of transfer of the money from the joint account is enough for IHT purposes?

itwasntme001

[Deleted User] said:

itwasntme001 said:

My main concern is more around the TRS registration info (given heavy fines for incorrect information) - does this need to be updated to show further gifts were made by both grandparents, not just the initial settlor (grandfather)? 

https://www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual/trsm32040

I have read this link before and it doesn't answer my question directly.  It says a settlor is someone who settles property into trust.  But does this mean it is just the initial "property" or money that is put into the trust?  Or does it include all future money being put into trust after the initial amount is put in?

TheGreenFrog

itwasntme001 said:

TheGreenFrog said:

Bare trusts are really only trusts in a technical sense, so I would focus on the practical issues.  As you have identified, the key here is who is gifting for IHT purposes.  For the initial gift, the HL form is stating that it is from one person. If that was not the intention then I suggest you and the other joint account holder sign a document (perhaps by way of deed, as per the initial bare trust deed, which means wording saying it is a deed and signed in front of a witness) stating that the initial gift was a joint gift but the form did not allow that to be stated (or similar).  It may or may not work but is better than nothing.  For gifts after the initial amount stated in the bare trust deed you could record (preferably by way of deed executed by the giver(s)) the amount of the gift, the identity of the beneficiary and date and stating that the amount will be paid into the HL nominee account.  In practice money from any source can be held in the HL nominee account (although it may need to be routed via the joint account recorded with HL) - for IHT purposes you just need to make sure that it is correctly documented.  But if you are a parent and the beneficiary is your minor child it is better to avoid mixing gifts from parents with gifts from, for example, grandparents as the tax treatment of resultant income will be different.  For that it may be better to set up a nominee account with a different provider.

Thanks.

I am not sure what the purpose of documenting the initial money being sent jointly as opposed to sole?  Is it for HMRC purpose or to avoid penalities?  If for IHT purpsoe, the initial amount is so small that it is pretty much irrelevant whether ti comes from one or both grandparents.

My main concern is more around the TRS registration info (given heavy fines for incorrect information) - does this need to be updated to show further gifts were made by both grandparents, not just the initial settlor (grandfather)?  Going forward large gifts will be made by grandparents only.  It will come out of their joint account.  Presumably just keep records in a spreadsheet that this has been done along with the record of transfer of the money from the joint account is enough for IHT purposes?

Documenting is for potential IHT purposes and if initial gift small then agree no point (especially if under the gifting exemptions).  Going forward for larger gifts probably better to be clear whether given solely or jointly than have HMRC argue with hindsight after a relevant death - money from joint account with no other documentation may lean towards a joint gift (although the original trust deed causes confusion) so if you don't want that then something more required.  Even if you do want it, given the terms of the trust deed there may be merit in having a doc saying that all gifts from the account to the nominee account are treated as jointly made gifts to the beneficiary to be held on the terms of the bare trust.  You could post the question on the tax forum as there is likely to be more experience there.

I would not worry about the TRS registration for a bare trust so far as the settlor is concerned - you have completed it so far as you are reasonably able and it is consistent with the trust document.  

itwasntme001

TheGreenFrog said:

itwasntme001 said:

TheGreenFrog said:

Bare trusts are really only trusts in a technical sense, so I would focus on the practical issues.  As you have identified, the key here is who is gifting for IHT purposes.  For the initial gift, the HL form is stating that it is from one person. If that was not the intention then I suggest you and the other joint account holder sign a document (perhaps by way of deed, as per the initial bare trust deed, which means wording saying it is a deed and signed in front of a witness) stating that the initial gift was a joint gift but the form did not allow that to be stated (or similar).  It may or may not work but is better than nothing.  For gifts after the initial amount stated in the bare trust deed you could record (preferably by way of deed executed by the giver(s)) the amount of the gift, the identity of the beneficiary and date and stating that the amount will be paid into the HL nominee account.  In practice money from any source can be held in the HL nominee account (although it may need to be routed via the joint account recorded with HL) - for IHT purposes you just need to make sure that it is correctly documented.  But if you are a parent and the beneficiary is your minor child it is better to avoid mixing gifts from parents with gifts from, for example, grandparents as the tax treatment of resultant income will be different.  For that it may be better to set up a nominee account with a different provider.

Thanks.

I am not sure what the purpose of documenting the initial money being sent jointly as opposed to sole?  Is it for HMRC purpose or to avoid penalities?  If for IHT purpsoe, the initial amount is so small that it is pretty much irrelevant whether ti comes from one or both grandparents.

My main concern is more around the TRS registration info (given heavy fines for incorrect information) - does this need to be updated to show further gifts were made by both grandparents, not just the initial settlor (grandfather)?  Going forward large gifts will be made by grandparents only.  It will come out of their joint account.  Presumably just keep records in a spreadsheet that this has been done along with the record of transfer of the money from the joint account is enough for IHT purposes?

Documenting is for potential IHT purposes and if initial gift small then agree no point (especially if under the gifting exemptions).  Going forward for larger gifts probably better to be clear whether given solely or jointly than have HMRC argue with hindsight after a relevant death - money from joint account with no other documentation may lean towards a joint gift (although the original trust deed causes confusion) so if you don't want that then something more required.  Even if you do want it, given the terms of the trust deed there may be merit in having a doc saying that all gifts from the account to the nominee account are treated as jointly made gifts to the beneficiary to be held on the terms of the bare trust.  You could post the question on the tax forum as there is likely to be more experience there.

I would not worry about the TRS registration for a bare trust so far as the settlor is concerned - you have completed it so far as you are reasonably able and it is consistent with the trust document.  

Thanks again, makes sense.  The funds will be gifted on a 50-50 basis but will document this just in case.  Presumably this is just a letter written as you suggested, and filed away somewhere safe?  Not to give/send to anyone until potentially HMRC/executors during probate?

TheGreenFrog

itwasntme001 said:

Thanks again, makes sense.  The funds will be gifted on a 50-50 basis but will document this just in case.  Presumably this is just a letter written as you suggested, and filed away somewhere safe?  Not to give/send to anyone until potentially HMRC/executors during probate?

Yes, that's right.