Metro Trust Bank Account

valiant24

I am a Trustee for a Trust which my late uncle set up to benefit my cousins upon the death of my aunt, who is now 91.

Earlier this year, when my aunt moved to a care home, we had to set up a bank account in something of a hurry to receive the proceeds of the sale of her home (around £200,000).   In the end we established the account with Metro Bank.  At the time it paid 0.00000000000000000000001% interest but that's since been cut to zero. 

As a Trustee it's my responsibility to act in the best interests of the Trust, and I think that includes getting some interest.  Metro Bank has a number of Fixed-Term accounts, the minimum of which is a one-year account paying 2.45%.   But I'm not convinced that it's in the best interests of the beneficiaries to tie the money up for a year given my aunt's age.  The Terms do seem to preclude early closure.

I wondered if anyone had any experience?   We struggled to find anyone else offering a Trustee account (and Metro Bank didn't really seem to understand its own product).  I'd look at a dealing account and maybe buy CSH2 or some short-term gilts, but again, are these available for Trust accounts.

Thoughts gratefully received.

Thanks
V

xylophone

I wonder could you clarify your post.

First, you mention that you are the Trustee of a Trust created by your late uncle to benefit your cousins upon the death of your aunt.

You then say that you had to set up an account in a hurry when your aunt moved into a care home, the purpose of which was to receive the proceeds of sale of her property.

Do you mean that your  late uncle was the sole proprietor of the marital home and his will granted his widow an interest in possession until such time as she moved out of it?

Or does she also have the right to benefit from any income arising on the invested capital of the sale proceeds of the property? 

Are you seeking to establish a dealing account in Trust?

https://adviserservices.fidelity.co.uk/secure/help-support/products/investment-account-help/about-our-investment-account/trust-pension-charity/

Or a deposit account?

https://www.mansfieldbs.co.uk/saving/trust-savings-accounts/

Have you read

https://www.gov.uk/trusts-taxes/registering-a-trust

poseidon1

Agree xylophone's analysis.

Assuming your Aunt has a continuing interest in possession as life tenant of what appears to be an IPDI trust, then not many options to secure decent deposit account interest rates.

If you can obtain a solicitor or Financial Advisor referral Cater Allen ( owned by Santander) worth a look per below

https://www.caterallen.co.uk/accounts/specialist-banking/solutions-for-trusts

There are  of course a couple of NSI products that could also be explored per link below, subject to jumping through NSI's compliance hoops

https://www.nsandi.com/files/asset/pdf/trust-faqs.pdf


You also mention gilts and if this is an area you feel confident exploring then short/medium term high coupons examples  could also make sense given your Aunt's age, or potentially low risk money market funds. 

However you are unlikely to be able to use the mainstream retail investment platforms on a DIY basis as trustee, except maybe Fidelity, but  I had a problem accessing xylophone's link to confirm exactly whats on offer. 

Alternatively  you could engage the services of one or more  of the specialist wealth managers such as  Canaccord Genuity or Walker Cripps stockbrokers ( for gilts).

That said such  wealth managers may expect you to have in place a trustee investment policy statement outlining the investment  objectives you expect of them - see template below - 

https://library.standardlife.co.uk/iht18.pdf

valiant24

poseidon1 said:

Agree xylophone's analysis.

Assuming your Aunt has a continuing interest in possession as life tenant of what appears to be an IPDI trust, then not many options to secure decent deposit account interest rates.

If you can obtain a solicitor or Financial Advisor referral Cater Allen ( owned by Santander) worth a look per below

https://www.caterallen.co.uk/accounts/specialist-banking/solutions-for-trusts

There are  of course a couple of NSI products that could also be explored per link below, subject to jumping through NSI's compliance hoops

https://www.nsandi.com/files/asset/pdf/trust-faqs.pdf


You also mention gilts and if this is an area you feel confident exploring then short/medium term high coupons examples  could also make sense given your Aunt's age, or potentially low risk money market funds. 

However you are unlikely to be able to use the mainstream retail investment platforms on a DIY basis as trustee, except maybe Fidelity, but  I had a problem accessing xylophone's link to confirm exactly whats on offer. 

Alternatively  you could engage the services of one or more  of the specialist wealth managers such as  Canaccord Genuity or Walker Cripps stockbrokers ( for gilts).

That said such  wealth managers may expect you to have in place a trustee investment policy statement outlining the investment  objectives you expect of them - see template below - 

https://library.standardlife.co.uk/iht18.pdf

Thanks.   Still gathering the exact info about the Trust to answer xylophone.

On the face of it NS&I is nice and safe and its Investment Bond looks OK, although we want a growth account really not an income one, but it's not the end of the world.   One downside is that your link says they accept deposits only by cheque: we wouldn't be able to do that on account of Metro not providing that facility (and it no longer being 1998 anyway ;-)).

valiant24

poseidon1 said:

Agree xylophone's analysis.

...

You also mention gilts and if this is an area you feel confident exploring then short/medium term high coupons examples  could also make sense given your Aunt's age, or potentially low risk money market funds. 

However you are unlikely to be able to use the mainstream retail investment platforms on a DIY basis as trustee, except maybe Fidelity, but  I had a problem accessing xylophone's link to confirm exactly whats on offer. 

Alternatively  you could engage the services of one or more  of the specialist wealth managers such as  Canaccord Genuity or Walker Cripps stockbrokers ( for gilts).

That said such  wealth managers may expect you to have in place a trustee investment policy statement outlining the investment  objectives you expect of them - see template below - 

https://library.standardlife.co.uk/iht18.pdf

First of all, to xylophone:

1)    My uncle died in December 2018 

2)    In his Will he gave to my aunt a life interest in one half of his 50% share of the freehold property of their house;  and the other half of his 50% share passed to my aunt as residuary beneficiary of his estate.  Thereby she owned 75% of the house (which was sold in Mar this year) outright.

3) My aunt is also the life tenant of a Will Trust, which under its terms did not end with the sale of the property, concerning the remaining 25% (it's about £200k), and is entitled to any income generated by the assets of the trust during her lifetime. When she dies my two cousins will be entitled to any remaining money in trust equally.

And to posedion1:

a) I don't have a financial advisor who can introduce us to Cater Allen (with whom I have had business accounts in the past)

b) NS and I is an option, but the accounts they allow are all income accounts whereas we would like a growth one.

c) Fidelity do not allow purchase of gilts, and short-term gilts is my favoured approach given my aunt's advanced age.

So any other suggestions or comments would be gratefully received.  Thank you all for your interest.

poseidon1

valiant24 said:

poseidon1 said:

Agree xylophone's analysis.

...

You also mention gilts and if this is an area you feel confident exploring then short/medium term high coupons examples  could also make sense given your Aunt's age, or potentially low risk money market funds. 

However you are unlikely to be able to use the mainstream retail investment platforms on a DIY basis as trustee, except maybe Fidelity, but  I had a problem accessing xylophone's link to confirm exactly whats on offer. 

Alternatively  you could engage the services of one or more  of the specialist wealth managers such as  Canaccord Genuity or Walker Cripps stockbrokers ( for gilts).

That said such  wealth managers may expect you to have in place a trustee investment policy statement outlining the investment  objectives you expect of them - see template below - 

https://library.standardlife.co.uk/iht18.pdf

First of all, to xylophone:

1)    My uncle died in December 2018 

2)    In his Will he gave to my aunt a life interest in one half of his 50% share of the freehold property of their house;  and the other half of his 50% share passed to my aunt as residuary beneficiary of his estate.  Thereby she owned 75% of the house (which was sold in Mar this year) outright.

3) My aunt is also the life tenant of a Will Trust, which under its terms did not end with the sale of the property, concerning the remaining 25% (it's about £200k), and is entitled to any income generated by the assets of the trust during her lifetime. When she dies my two cousins will be entitled to any remaining money in trust equally.

And to posedion1:

a) I don't have a financial advisor who can introduce us to Cater Allen (with whom I have had business accounts in the past)

b) NS and I is an option, but the accounts they allow are all income accounts whereas we would like a growth one.

c) Fidelity do not allow purchase of gilts, and short-term gilts is my favoured approach given my aunt's advanced age.

So any other suggestions or comments would be gratefully received.  Thank you all for your interest.

Shame you did not maintain your personal banking relationship with Cater Allen, might have been able to leverage that relationship to access a trustee account.

Going forward NSI is  a relatively straight forward option although the interest rates are not brilliant.

Even if their Growth Bond was available to trustees it would not be suitable for your Aunt's trust.

She is absolutely entitled to trust income as it arises, the trustees have no powers at all to accumulate or withold.  Accordingly the most appropriate product would be the Income bond paying monthly interest. 

 Ideally you would arrange for the interest to be mandated direct to her personal bank account, in that way you avoid the trustees having to report and pay trust tax on the interest before accounting for the net amount to your Aunt. That's not to say that by adopting this approach you completely avoid having to submit trust tax returns reporting zero trust tax liabilities, but hopefully sooner rather than later HMRC would suspend returns.

As regarded the short dated high coupon gilts alternative, on reflection unless you can buy or sell with little or no accrued income arising ( ie very soon after coupon payment), the complexities of the Accrued Income Scheme for trustees renders this option unsuitable in your case. Where a charge does arise trustees pay at a penalty rate of 45% regardless of the fact that other income is only taxed at basic rates.

Finally, if you had not previously registered the trust on HMRC's Trust register,  hopefully you used the link provided by @xylophone to do so. You have more than likely already triggered a technical HMRC penalty by failing to do so previously.

valiant24

poseidon1 said:

Finally, if you had not previously registered the trust on HMRC's Trust register,  hopefully you used the link provided by @xylophone to do so. You have more than likely already triggered a technical HMRC penalty by failing to do so previously.

We have not registered the Trust.  I had no idea and had never heard of this.   Will do so now, thanks.

As for getting some income, this has been astonishingly frustrating!:

• Metro Bank current isn't paying any interest
• Metro have 1-year Term accounts (2.45%), but if aunt died one month into a 1-year term we could be stuck for a year.  I will try to find out whether Metro stick to their "no withdrawals" on the death of a beneficiary, but it's almost impossible to contact anyone there who would have this level of knowledge, or even understand the question.
• Bath BS has a current account similar to Metro's that pays 0.8%.  A lot of faf for a £1,600 a year.
• Cater Allen require you to have an IFA.
• NS&I would be nice and safe and has an Income Bond account paying 3.26% but - get this - you can only open it by cheque! Is it still 1998?

poseidon1

valiant24 said:

poseidon1 said:

Finally, if you had not previously registered the trust on HMRC's Trust register,  hopefully you used the link provided by @xylophone to do so. You have more than likely already triggered a technical HMRC penalty by failing to do so previously.

We have not registered the Trust.  I had no idea and had never heard of this.   Will do so now, thanks.

As for getting some income, this has been astonishingly frustrating!:

• Metro Bank current isn't paying any interest
• Metro have 1-year Term accounts (2.45%), but if aunt died one month into a 1-year term we could be stuck for a year.  I will try to find out whether Metro stick to their "no withdrawals" on the death of a beneficiary, but it's almost impossible to contact anyone there who would have this level of knowledge, or even understand the question.
• Bath BS has a current account similar to Metro's that pays 0.8%.  A lot of faf for a £1,600 a year.
• Cater Allen require you to have an IFA.
• NS&I would be nice and safe and has an Income Bond account paying 3.26% but - get this - you can only open it by cheque! Is it still 1998?

According to the link below from Metro Bank, they issue a cheque book specifically for the purpose of 3rd party payments -

https://share.google/gHJAbAU6HuApVIP2Y

Given this, there should be no problem proceeding with the NSI account.