Small Inheritance 'Trust Fund'

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Jason23k
Jason23k Posts: 3 Newbie
in Savings & investments
Hello all, first time visitor here!

I'm an executor of a relative's will (there's two of us). We are coming to the point of distributing the funds but have found what is hopefully an easy problem to solve.

We have a fixed amount (a few thousand pounds) to go to a younger member of the family. They are currently 17 and the will states that they will inherit the sum at 21. This seems to be an easy and common thing to do but we're struggling to find the solution.

Given the short timescale, we're not looking for large interest gains but we need something that is safe, legal and that can't be accessed by the youngster for that time period. A really trust fund isn't practical due to the costs and courts etc.

I know premium bonds are not a great investment but can be bought for children but they gain access at 18 not 21. If we open an account in the executor's name and hold it then we will have to consider our taxes etc.

Any suggestions? Ideally from a high street bank

Many thanks!

Jason

Comments

  • Mojisola
    Mojisola Posts: 35,557 Forumite
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    Jason23k wrote: »
    We have a fixed amount (a few thousand pounds) to go to a younger member of the family. They are currently 17 and the will states that they will inherit the sum at 21.

    AIUI, despite the will giving 21 as the inheritance age, the beneficiary could ask for the money at 18 and the executors would have to hand it over.
  • xylophone
    xylophone Posts: 44,426 Forumite
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    edited 13 September 2017 at 12:39PM
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    If the bequest is "indefeasibly vested"

    http://www.prescient-financial.com/docs/Bare%20trust%20returns.pdf

    in the beneficiary then this is a bare trust.

    If it is "indefeasibly vested" so that the cash belongs absolutely to the beneficiary, the easiest way round may be to open a fixed rate product that matures at or after her 21st birthday.

    https://www.moneysupermarket.com/shop/savings/details/?productCode=SAV_TESCO_BB04DB6F285746F6BAF563D1056CD774&baseCode=sav_tesco_a8fbcf7923914af58d4d13734efe475e&ResultsCount=4&PositionInResults=1&gid=SAV_ALL

    http://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html

    You would need to check with the provider whether they would allow the Trustees to hold the bond in trust for the beneficiary.
  • Linton
    Linton Posts: 17,172 Forumite
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    3 year NS&I Guaranteed growth bond? See here
  • dunstonh
    dunstonh Posts: 116,383 Forumite
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    If we open an account in the executor's name and hold it then we will have to consider our taxes etc.

    Plus, the executor would not be carrying out their duties.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    dunstonh wrote: »
    Plus, the executor would not be carrying out their duties.

    Why is a bare trust not acceptable?
  • dunstonh
    dunstonh Posts: 116,383 Forumite
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    getmore4less wrote: »
    Why is a bare trust not acceptable?

    The executor's job is to distribute the money. It is not to hold on to it against the wishes of the deceased.

    A trust is suitable and this is exactly why Will Trusts exist. However, that is not the bit I was quoting in my response.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Jason23k
    Jason23k Posts: 3 Newbie
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    It does sound like a bare trust is what we need to do. I'll read a little more on the HMRC site.

    It's beginning to sound like it depends upon the wording of the will which could be bad. The legal rights to the fund shouldn't be an issue as the recipient is sensible, for the moment anyway. Hopefully we can avoid any difficulties later.

    It helps if you know what to search for!
  • Malthusian
    Malthusian Posts: 10,944 Forumite
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    Jason23k wrote: »
    Given the short timescale, we're not looking for large interest gains but we need something that is safe, legal and that can't be accessed by the youngster for that time period.

    Why not? From what you've said he will be entitled to demand the capital at 18. And you said he is sensible. (At least "for the moment", but it isn't your problem if you distribute the cash and he then becomes non-sensible. That could happen if you paid it out to him at 21, or any other age.)

    Since he is the sensible type, in your shoes I'd just ask him if he wants to save everyone some admin and take the money at 18. Meanwhile I would just put it in NS&I Income Bonds in a bare trust account. There is little to be gained in tying the money up for three years and the fact that he will be entitled to access the capital in less than a year means there is a good reason not to.
  • Jason23k
    Jason23k Posts: 3 Newbie
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    Why not? Simple, that was the wishes of the person who died and as executors it's our duty to follow their wishes to the best of our ability. From my point of view, I've asked lots of people how they'd have reacted at age 18 and everyone said it would be a bad move.

    Placing the money beyond reach removes all temptation.

    Hopefully we'll find a simple solution.

    Thanks to everyone for their posts!
  • Alexland
    Alexland Posts: 9,653 Forumite
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    If the recipient is sensible then you don't need to lock it up just make them aware of it, that it is modest and that the will requested you make it available at 21 so that gives them some time to think about how how it will be used. Are they really likely to try and force it from you?
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