Bare trust query

Keep_pedalling

koicarp1 said:

poseidon1 said:

koicarp1 said:

A great aunt has left my little girl a 6 figure sum in her will, which should be settled by her solicitor in a few weeks. I'm thinking we should set up a bare trust, with three trustees including myself. Who's best to set up the trust? Myself, her grandparents (great aunt no longer with us) or perhaps the solicitor? 
Currently we use ii who don't offer bare trust or jsipp (which great aunt wanted us to set up), so we will be looking at ajbell, bestinvest, hl etc

I would be more inclined to see exactly what your Aunt's will stated with regard to legacy in favour of your daughter for example whether there is a  contingent age before she becomes absolutely entitled. 


 Incidentally who is the acting executor and what is the current age of your daughter?

The will leaves the whole estate, shared equally among 3 beneficiaries, currently aged 9, 10 and 18. She does state she wants them to have access to it from age 21, but I can see that isn't possible in bare trust. 
My wife (currently terminally ill) and her cousin are executors. 

Unless the will states that it is conditional on reaching the age of 21 (with their inheritance passing to the other beneficiaries if they die before their 21st birthday) then the gift is absolute and is merely a wish, and a bare trust is the appropriate trust to use for the two minors. The 18 year old is entitled to their inheritance immediately.  

Most wills don’t include such conditions or create discretionary trusts because it creates major headaches for the trustees.

koicarp1

Keep_pedalling said:

koicarp1 said:

Keep_pedalling said:

You daughter will be entitled to her inheritance on her 18th birthday so SIPP is out of the question. I would not take on a professional as trustee it’s not really needed. 

Doesn't managing her own sipp at 18 mean she has access to her inheritance?

No, she would be able to touch it for decades if it is a SIPP. In any case it is not possible to large amounts into a SIPP for a minor with no income.

She would be able to manage it, but not spend it. We're fully aware of the limitations of jsipp as she already has one. Are you quoting some legal guidance or is this opinion? 

kermchem

OP says that his wife and cousin are executors, but in the first post says that the funds are coming in a few weeks from deceased's solicitor. Is this solicitor just selling a house, or are they also involved in settling the estate, and did they write the will? If the solicitor wrote a will leaving funds to three minors one might hope that something other than a bare trust might have been set up in the will.

poseidon1

koicarp1 said:

poseidon1 said:

koicarp1 said:

A great aunt has left my little girl a 6 figure sum in her will, which should be settled by her solicitor in a few weeks. I'm thinking we should set up a bare trust, with three trustees including myself. Who's best to set up the trust? Myself, her grandparents (great aunt no longer with us) or perhaps the solicitor? 
Currently we use ii who don't offer bare trust or jsipp (which great aunt wanted us to set up), so we will be looking at ajbell, bestinvest, hl etc

I would be more inclined to see exactly what your Aunt's will stated with regard to legacy in favour of your daughter for example whether there is a  contingent age before she becomes absolutely entitled. 


 Incidentally who is the acting executor and what is the current age of your daughter?

The will leaves the whole estate, shared equally among 3 beneficiaries, currently aged 9, 10 and 18. She does state she wants them to have access to it from age 21, but I can see that isn't possible in bare trust. 
My wife (currently terminally ill) and her cousin are executors. 

As previously advised I would want to see the precise clause/s  ( with names redacted ) now that it's clear there are three beneficiaries with an age 21 stipulation.  Would like to see if there are other stipulations 

If the clause then goes on to state that if one or other of the Grandchildren fails to survive to age 21, the survivors take their share then this is not a simple bare trust arrangement.  Are they all siblings or cousins?

OP you should approach the solicitor for clarification on the issue of survivorship to age 21 and whether as been suggested here you can completely ignore that contingent age and pass the legacy to each child at age 18. Indeed I am a little surprised that such clarification has not already been provided.

With 6 figures per child there is alot at stake in ensuring this is correctly handled from outset.

poseidon1

OP whilst awaiting clarification on the age 21 contingency you and others might benefit from this short article in the Estate Gazette  below outlining the difference between bare trusts and contingent trusts. 

 Specifically note the beneficiaries' entitlements to income under each type of trust, which in turn affects the tax position of such income prior to the vesting age.

https://www.thegazette.co.uk/all-notices/content/103941

koicarp1

poseidon1 said:

koicarp1 said:

poseidon1 said:

koicarp1 said:

A great aunt has left my little girl a 6 figure sum in her will, which should be settled by her solicitor in a few weeks. I'm thinking we should set up a bare trust, with three trustees including myself. Who's best to set up the trust? Myself, her grandparents (great aunt no longer with us) or perhaps the solicitor? 
Currently we use ii who don't offer bare trust or jsipp (which great aunt wanted us to set up), so we will be looking at ajbell, bestinvest, hl etc

I would be more inclined to see exactly what your Aunt's will stated with regard to legacy in favour of your daughter for example whether there is a  contingent age before she becomes absolutely entitled. 


 Incidentally who is the acting executor and what is the current age of your daughter?

The will leaves the whole estate, shared equally among 3 beneficiaries, currently aged 9, 10 and 18. She does state she wants them to have access to it from age 21, but I can see that isn't possible in bare trust. 
My wife (currently terminally ill) and her cousin are executors. 

As previously advised I would want to see the precise clause/s  ( with names redacted ) now that it's clear there are three beneficiaries with an age 21 stipulation.  Would like to see if there are other stipulations 

If the clause then goes on to state that if one or other of the Grandchildren fails to survive to age 21, the survivors take their share then this is not a simple bare trust arrangement.  Are they all siblings or cousins?

OP you should approach the solicitor for clarification on the issue of survivorship to age 21 and whether as been suggested here you can completely ignore that contingent age and pass the legacy to each child at age 18. Indeed I am a little surprised that such clarification has not already been provided.

With 6 figures per child there is alot at stake in ensuring this is correctly handled from outset.

Three second cousins.
The will apparently doesn't mention anything around actions, should any beneficiaries not reach 21. The solicitor is selling the house. My wife doesn't have the will in front of her but says although it was signed off by the current solicitor, it was very much written in great aunt's words rather than any legalise.

kermchem

I am surprised that the solicitor, even if only hired at present to sell the house, doesn't want to satisfy themselves as to whether the beneficiaries are being correctly treated. 

poseidon1

koicarp1 said:

poseidon1 said:

koicarp1 said:

poseidon1 said:

koicarp1 said:

A great aunt has left my little girl a 6 figure sum in her will, which should be settled by her solicitor in a few weeks. I'm thinking we should set up a bare trust, with three trustees including myself. Who's best to set up the trust? Myself, her grandparents (great aunt no longer with us) or perhaps the solicitor? 
Currently we use ii who don't offer bare trust or jsipp (which great aunt wanted us to set up), so we will be looking at ajbell, bestinvest, hl etc

I would be more inclined to see exactly what your Aunt's will stated with regard to legacy in favour of your daughter for example whether there is a  contingent age before she becomes absolutely entitled. 


 Incidentally who is the acting executor and what is the current age of your daughter?

The will leaves the whole estate, shared equally among 3 beneficiaries, currently aged 9, 10 and 18. She does state she wants them to have access to it from age 21, but I can see that isn't possible in bare trust. 
My wife (currently terminally ill) and her cousin are executors. 

As previously advised I would want to see the precise clause/s  ( with names redacted ) now that it's clear there are three beneficiaries with an age 21 stipulation.  Would like to see if there are other stipulations 

If the clause then goes on to state that if one or other of the Grandchildren fails to survive to age 21, the survivors take their share then this is not a simple bare trust arrangement.  Are they all siblings or cousins?

OP you should approach the solicitor for clarification on the issue of survivorship to age 21 and whether as been suggested here you can completely ignore that contingent age and pass the legacy to each child at age 18. Indeed I am a little surprised that such clarification has not already been provided.

With 6 figures per child there is alot at stake in ensuring this is correctly handled from outset.

Three second cousins.
The will apparently doesn't mention anything around actions, should any beneficiaries not reach 21. The solicitor is selling the house. My wife doesn't have the will in front of her but says although it was signed off by the current solicitor, it was very much written in great aunt's words rather than any legalise.

Let's see the actual will clauses when that becomes available.

Lack of 'legalese'  by someone who does not understand the relevance of legal terminolgy in these situations, may actually be detrimental to the outcomes intended by the testator, especially when providing legacies to minors.

For example if there is no clause permitting parents to give a good receipt for their child's legacy (as inferred by DRS1 in his early post) such a clause cannot be 'read in' see below - 

https://journal.step.org/step-journal-may-2014/receipt-minors

Like it or not English wills should have appropriate 'legalese' for very good reason, so I am somewhat concerned the great aunt's will appears to have been  in her own words.

xylophone

Has the bequest indefeasibly vested in the children? That is to say, is it absolute and unconditional? The share of the money belongs to each child now and the only reason that the minors may not access now is by reason of minority? If the minor died  the money would be in his/her estate and would pass to the parent?

See https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem1563

poseidon1

xylophone said:

Has the bequest indefeasibly vested in the children? That is to say, is it absolute and unconditional? The share of the money belongs to each child now and the only reason that the minors may not access now is by reason of minority? If the minor died  the money would be in his/her estate and would pass to the parent?

See https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem1563

Examples 1 and 3 in your HMRC link illustrates the different trust outcomes depending on  exactly what the will states, something the OP has no personal knowledge of at this point.

The bequest wordings in the 1 and 3  examples may be subtle, but result in entirely different legal and tax outcomes. The great aunt ( unknowingly)  in her will drafting could quite easily have triggered an example 3 outcome.

A useful link for others to take heed of.