Designated account for minor - what is the trust deed?

Trusts Discussion
1

Hi,

As per the title:

We have a Janus Henderson investment holding, established as a designated account for the client’s godson, using the fund manager’s application form. The application has the following question:

Are you the beneficial owner of this investment? (yes/no)

The client has selected ‘no’ and included in the next section of the application the details of the godson (name, address, dob) and stated 100% ownership.

As I understand it, this has effectively created a bare trust for the godson’s benefit. The investment is held in the client’s name, so he is settlor and trustee. This is all clear from the application form.

The investment has underperformed and with the godson now in his early teens, we want to advise the client on a more appropriate structure for the investments to protect what growth there has been.

The question I have is: does the application form itself serve as the trust deed? And, when considering the upcoming need to register it through the TRS, presumably we can advise the client (who will be the lead trustee) to just create a suitable name for it when completing the online registration?

Thanks

2

I don’t think it is a deed, simply because it is not a deed. However, it does create a trust and is still registrable as it creates the trust expressly.

Yes, I think you can call it anything.

Andrew Goodman
Osborne Clarke LLP

3

I don’t think the application form itself is a trust deed but at the very least it should be clear from it and surrounding circumstances that a bare trust has in fact been created (ie the godson has an immediate and absolute title to both capital and income from the investment held by the godparents) and the godparents intended to create a trust.

Presumably there is a bank account in the name of the godparents’ names designated in some manner as being held on behalf of the named godson to receive dividends, capital sales proceeds etc. The name on the bank account could be used as the name for the trust when registering for TRS purposes.

A bare trust is not a settlement for CGT and IHT purposes but is for income tax (albeit no adverse tax implications as not a parental settlement).

Malcolm Finney