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current account for a Will Trust

hiriskpaul
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current account for a Will Trust

#243778

Postby hiriskpaul » August 12th, 2019, 3:21 pm

The Will I am administering sets up a family trust with part of the assets. I have spoken to Hargreaves Lansdown and they can provide me with an account for investments, but where do I go for a current account? I cannot find any information about this on bank web sites. Presumably all we need is an account in the name of the Trust, e.g. "A RICHMAN FAMILY TRUST", with me and the other trustee able to operate the account. Is that right? Essentially very similar to a business account, but I would prefer to have an account without charges.

Any suggestions, advice and bank recommendations gratefully received.

My first choice was Nationwide, but they were no help. Lloyds would be ok (if any good) as the other trustee banks with them, so hopefully one less set of ID checks.

PinkDalek
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Re: current account for a Will Trust

#243783

Postby PinkDalek » August 12th, 2019, 3:40 pm

Similar questions are asked at Bank Accounts Savings & ISAs.

Here's a recent one:

Current Account for Trust.
viewtopic.php?p=235212#p235212

Not sure if you want to continue here at Legal Issues or add to that Topic if any further unanswered questions.

Edit: We are now at Bank Accounts Savings & ISAs and I've also found a post from a while back, where I described the opening process with Hargreaves Lansdown if of any assistance (with a brief repeat of what we did with Barclays):

Discretionary trust banking and sharedealing; who?
viewtopic.php?p=132556#p132556
Last edited by PinkDalek on August 12th, 2019, 3:50 pm, edited 2 times in total.

chas49
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Re: current account for a Will Trust

#243785

Postby chas49 » August 12th, 2019, 3:45 pm

Moderator Message:
Moved from Legal Issues to Bank Accounts etc. (chas49)

hiriskpaul
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Re: current account for a Will Trust

#243795

Postby hiriskpaul » August 12th, 2019, 4:05 pm

Thanks for moving, much better board.

Just had a thought - do we need a special account set up in the name of the trust at all? If we had a normal joint account and both wrote witnessed statements stating the assets in the account were the property of the Trust, would that be ok?

I do not anticipate there being much money in the current account. It will mostly be invested at HL, or in transit to HMRC and beneficiaries.

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Re: current account for a Will Trust

#243828

Postby Parky » August 12th, 2019, 5:34 pm

I am in the middle of setting up current accounts for 2 trusts.
I went around all the banks in town and Barclays are the only ones who do that type of trust account. (Others do bare trust Designated accounts - that's what they think you are talking about when you mention "trusts").
It is taking a long time - they sat on the application for 3 weeks before I started chasing.

I looked at HL for the trust share dealing account, and their terms and conditions say they will only pay out money to an bank account in the name of the trust, and I suspect other brokers will be the same. In any case, it's probably best to have an account in the name of the trust rather than in the trustees names, which would cause problems if/when the trustees die or retire from trusteeship.

If it's just a short term thing maybe you could open a joint HL account in the name of the trustees and a bank account in the same names, but if anything goes wrong (ie someone dies) there will be IHT consequences.

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Re: current account for a Will Trust

#243832

Postby scrumpyjack » August 12th, 2019, 5:48 pm

Parky wrote:I am in the middle of setting up current accounts for 2 trusts.

If it's just a short term thing maybe you could open a joint HL account in the name of the trustees and a bank account in the same names, but if anything goes wrong (ie someone dies) there will be IHT consequences.


There would not be IHT consequences as the trustees are not the beneficial owners of the assets, so the assets would not form part of their estates. In the same way as you can hold shares as bare trustee for a child. You are not the beneficial owner of those so they do not come into into your tax affairs.

I have had this situation and have reported such share disposals in the notes on my return to explain why the disposals were not included in my return. This preempts questions from the revenue when data is reported directly to them by brokers or banks etc.

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Re: current account for a Will Trust

#243834

Postby supremetwo » August 12th, 2019, 5:52 pm

hiriskpaul wrote:Thanks for moving, much better board.

Just had a thought - do we need a special account set up in the name of the trust at all? If we had a normal joint account and both wrote witnessed statements stating the assets in the account were the property of the Trust, would that be ok?

I do not anticipate there being much money in the current account. It will mostly be invested at HL, or in transit to HMRC and beneficiaries.

Be aware of the not-simple tax rules for trusts.
https://www.gov.uk/trusts-taxes/trusts-and-income-tax

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Re: current account for a Will Trust

#243845

Postby Parky » August 12th, 2019, 6:37 pm

scrumpyjack wrote:
There would not be IHT consequences as the trustees are not the beneficial owners of the assets, so the assets would not form part of their estates. In the same way as you can hold shares as bare trustee for a child. You are not the beneficial owner of those so they do not come into into your tax affairs.

I have had this situation and have reported such share disposals in the notes on my return to explain why the disposals were not included in my return. This preempts questions from the revenue when data is reported directly to them by brokers or banks etc.


Clitheroe Kid , in a discussion on this issue on the legal practical board -

"A Trust Account means that the assets in the account are owned by the account holder (the trustee) on trust for someone else (the beneficiary).

So if the account holder dies the assets would pass not as part of his estate, but in accordance with the terms of the trust.

With an ordinary account the assets in the account are owned both legally and beneficially by the account holder, so that on death they would form part of his estate."

His opinions are well regarded on these boards, so I am following his advice.

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Re: current account for a Will Trust

#243863

Postby scrumpyjack » August 12th, 2019, 9:09 pm

I have the utmost respect for Clitheroe but it is perfectly possible to have an asset registered in one’s own name but not to be the beneficial owner of it. I gave the example that you cannot legally register shares in the name of a minor where they are the beneficial owner but they can be registered in the name of someone else who is holding them as bare trustee for the beneficial owner.

You should obviously for the avoidance of doubt have it recorded who the beneficial owner is.

Clitheroe kid is of course quite right about the nature of a trust account but that does not necessarily mean it has be part of the title of the account printed on the statement/cheque book. It should for the avoidance of doubt be recorded that the nominal holder of the account is in fact holding as trustee.

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Re: current account for a Will Trust

#243872

Postby hiriskpaul » August 12th, 2019, 10:31 pm

scrumpyjack wrote:I have the utmost respect for Clitheroe but it is perfectly possible to have an asset registered in one’s own name but not to be the beneficial owner of it. I gave the example that you cannot legally register shares in the name of a minor where they are the beneficial owner but they can be registered in the name of someone else who is holding them as bare trustee for the beneficial owner.

You should obviously for the avoidance of doubt have it recorded who the beneficial owner is.

Clitheroe kid is of course quite right about the nature of a trust account but that does not necessarily mean it has be part of the title of the account printed on the statement/cheque book. It should for the avoidance of doubt be recorded that the nominal holder of the account is in fact holding as trustee.

This has always been my understanding as well. There is also this from HMRC's manual:

https://www.gov.uk/hmrc-internal-manual ... l/tsem9930

Ownership and income tax: Specific types of property: bank and building society accounts - legal and beneficial ownership

Banks and building societies in the UK operate on the basis of the legal ownership and have no need to query the actual beneficial ownership.

The fact that an individual is named on an account does not necessarily mean that they are the beneficial owner. If they are named, it means they can draw on the account. But the ability to withdraw money does not imply any beneficial ownership. It is the entitlement to income as it arises that is important, not by whom capital or income is withdrawn.


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Re: current account for a Will Trust

#243903

Postby Parky » August 13th, 2019, 7:41 am

Interesting - so why do HL and others insist that they will only pay money into an account in the Trust's name? I would like to see that challenged.

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Re: current account for a Will Trust

#243919

Postby scrumpyjack » August 13th, 2019, 9:00 am

Parky wrote:Interesting - so why do HL and others insist that they will only pay money into an account in the Trust's name? I would like to see that challenged.


It makes life a lot easier, and more secure, for brokers to insist that money can only be paid into one bank account and that it be in the same name as the client's account with the broker. I think all brokers do this. It used to be the case, when I used TD Waterhouse, that I could pay money from my account with them to any UK bank account, but they eventually fell into line with the policy of only one account.

hiriskpaul
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Re: current account for a Will Trust

#243923

Postby hiriskpaul » August 13th, 2019, 9:04 am

Parky wrote:Interesting - so why do HL and others insist that they will only pay money into an account in the Trust's name? I would like to see that challenged.

Thanks, I did not know that HL insisted upon that. So looks like we will have to set up a current account for the trust in any case.

HL and other brokers are bound by many regulations. I suspect that this requirement comes about from anti-money laundering rules rather than HMRC rules or Trust Law.

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Re: current account for a Will Trust

#244000

Postby Parky » August 13th, 2019, 1:40 pm

hiriskpaul wrote:
Parky wrote:Interesting - so why do HL and others insist that they will only pay money into an account in the Trust's name? I would like to see that challenged.

Thanks, I did not know that HL insisted upon that. So looks like we will have to set up a current account for the trust in any case.

HL and other brokers are bound by many regulations. I suspect that this requirement comes about from anti-money laundering rules rather than HMRC rules or Trust Law.


Probably. The same applies to personal accounts, but you wouldn't notice because you would normally give your own current account to have money paid to. When I said "insists", I meant that its in the small print of the terms and conditions, so I would be surprised if they would not insist.


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