I am the co-trustee of the trust created from my father’s will when he died.
The proceeds have been placed in a discretionary trust (as specified only in the will) for me, my brother, and my stepbrother but with the expressed wish that it be available to my stepmother if she needed it. I am a co-trustee along with my step-brother’s close friend (my stepbrother lives in Australia).
She is self-funding in care but has about 3 year’s-worth of funding left in her own investments. If she lives longer than that (she’s 90 and not very mobile) we hope that the Local Authority will agree to maintain her where she is or that the home will accept the Local Authority’s rates. If not, we’ll need to start dipping into the trust.
The legacy to the trust is about £240k in cash, currently with the private solicitor. It’s taken over 2 years to get to this stage so, on their advice, I’ve already registered the trust with HMRC. The probate solicitors don’t want to manage it, possibly because of the low costs or (as they say) because they are wary of being sued by any/all of the beneficiaries for not seeking to maximise growth/income etc. (?!)
Since it’s a simple trust, with no need for it to generate income and there’s a fair chance it won’t be accessed until my stepmother dies, my plan was simply to place it in a trustee account with a bank. We’ve no need for income from it and simplicity, security & low maintenance costs are the main requirements. I’m happy to manage it and report to HMRC. As has been reported elsewhere in this forum, trustee accounts are rarer than hen’s teeth now and minimal cost ones seemingly non-existent.
My questions here are:
- What are our legal options for the storage of the cash until it’s either used by my stepmother or divvied up to the ultimate beneficiaries?
- If I can’t open a trustee account, can I and my co-trustee put this cash somewhere else at low cost/low risk ourselves?
- Do we have the option of dividing up the trust assets to the ultimate named beneficiaries now and us each ‘storing’ it away ourselves (individual tax implications accepted).
- Aside from using an IFA (I’m speaking to one this afternoon but, understandably, most aren’t interested unless there’s a decent investment requirement) are there any other options I should be thinking of?
Many thanks in advance,
I doubt you have the right to distribute the estate as the Trust has an initial beneficiary, after which, it passes to the remaindermen. THEY have the rights to do what they wish at THAT time,
I would suggest that you do not engage an IFA, as he would likely want to invest the assets and the risks would be higher than holding a bank account. Just be careful. If the Trust is satisfied to hold the money as it is, then save yourselves the costs involved in appointing an IFA.
As long as the Trustees maintain the assets in an account that is correctly managed, then they are doing their job correctly.
As the Trust has assets below the nil rate band and unlikely to go above that, it is my understanding that it does not need to be registered.
The trouble is that we don’t even have a bank account yet. It’s still with the probate solicitor who’s pressing us to move it from them. That’s my main problem.
I am sorry to hear you are having difficulty with this trust.
Given that there is £240,000 to invest I would still encourage you to contact an independent financial advisor, and I would be surprised if you couldn’t find a solicitor to advise you if you shop around.
There are some options for investing the funds without a financial advisor (e.g. some NS&I products can be used for trusts) but you do have a duty to invest the funds appropriately which almost always means taking proper advice.
If, as I read your original post, the trust is fully discretionary (i.e. your mother doesn’t have a right to receive the income, but rather is named in a separate letter of wishes as the primary intended beneficiary) then you could look to distribute the funds to beneficiaries. You would have to be satisfied this was in the best interests of the trust as a whole - perhaps in particular, that the funds (or a proportion of them) will not be needed for your mother’s benefit. You will need to consider carefully how you do this - for instance, not to fall afoul of the self-dealing rule which says trustees cannot normally use their discretionary powers to benefit themselves. A well-drafted trust probably gives you options for getting around that rule, however - typically by having an independent trustee involved who approves the transaction. I would encourage you to take legal advice from a lawyer with trusts experience - you might consider using the STEP directory, Members | STEP.
For what it’s worth, the advice to register the trust now that it is more than two years from death was correct, as a result of changes in the law that came into force last year. (The old rule was that the trust only became registrable if it had a tax liability, which is no longer the case.)
Thanks for the advice James.
I put out an APB to a bunch of local IFAs and a few other businesses and have had a few positive replies. I have my fingers crossed.
This isn’t a recommendation as I haven’t used them myself (and I have no connection to them either), but you could try someone like this as they appear to specialise in trustee accounts:-
Thanks for all the help provided so far. I think I’m fixed up with a Money Manager with links to the major investment banks.
It seems that Cater Allen ARE accepting new applications - but not direct, only through agents. It’s one of those that I’m using.
Metrobank, even if they are accepting applications, will only accept them in person. My nearest branch is 100 miles away and a similar distance for my co-trustee.
Handelsbanken only (are only?) accept(ing) deposits over £400k. Ours is only £235k so doesn’t qualify.
I looked at Metro Bank, there’s a £150 set up fee and £15 for a bankers draft cheque. Interest rate is 0.1%
I’m going through similar, if it helps, after hours of phoning and walking around High St. Banks I had fantastic service from Skipton Building Society. Cheque book with nominated number of signatures. Free account provided above £10,000 I think and 2.25% no set up fee. No branch nearby I think you can do it on the phone but not sure on that, I walked in.
I didn’t try them, admittedly. Everyone I approached baulked at the Trustee or Beneficiary based abroad.