The Lemon Fool

Does anyone have any experience of using trusts for NS&I Savings certificates?

I am sole exor of my mother’s estate and along with other assets she had about 20 index-linked Savings certificates (SC), totalling about £340k at the moment. The estate goes to two beneficiaries. SCs can be inherited and both beneficiares want to inherit the SCs intact (admittedly poor interest rate and now CPI, but tax-free, and in addition to the FSCS limit and other tax-free allowances e.g. ISA used). Dividing the SCs between two beneficiares is tricky because NS&I say they cannot split SCs, and they cannot consolidate all 20 and produce two certificates of the currently available issue (they used to be able to do this, but won’t do it any more for reasons I have yet to find out: I’ve been given lots of “reasons”).

NS&I have come up with a proposal:“have the certificates transfered into trust holdings with yourself as the sole trustee. You would then manage the accounts for the beneficiaries”

I’m waiting for a call back from NS&I about what type of trust it would be (bare, discretionary etc) and a couple of other queries, but I’m curious to know if anyone does this. I’m interested to know what type(s) of trust NS&I are proposing (all they say at the moment is “into trust holdings”), whether the trust would incur tax (which would be counter-intuitive as SCs are tax-free but they might get taxed as any other assets within a trust). On a practical level, if there are SCs held “in trust” (NS&I’s words, at the moment), can they be administered online and over the phone (or does it have to be post/paper which is painfully slow if not impossible): at present, all admin on a NS&I deceased estate has to be done in writing and it’s worse than painful)

TIA

yorkshirelad1 wrote:Does anyone have any experience of using trusts for NS&I Savings certificates?

I’m waiting for a call back from NS&I about what type of trust it would be (bare, discretionary etc) and a couple of other queries, but I’m curious to know if anyone does this. I’m interested to know what type(s) of trust NS&I are proposing (all they say at the moment is “into trust holdings”), whether the trust would incur tax (which would be counter-intuitive as SCs are tax-free but they might get taxed as any other assets within a trust). On a practical level, if there are SCs held “in trust” (NS&I’s words, at the moment), can they be administered online and over the phone (or does it have to be post/paper which is painfully slow if not impossible): at present, all admin on a NS&I deceased estate has to be done in writing and it’s worse than painful)

TIA

The beneficiary or beneficiaries are defined by name, so it is a bare trust by definition (i.e no discretion). The ones I hold have two trustees, so the admin has to be done by post (because it is a joint account), but he only admin is to fill in a form when the certificates are renewed or cashed in. They show up in my on-line NS&I account, so maybe if there is a single trustee you can administer them on line . AFAIAA NS&I Savings Certificates are tax free - full stop. In any case, for a bare trust, any tax would have been payable by the beneficiaries, not by the trust.

Thanks. Useful info!

Parky wrote:. AFAIAA NS&I Savings Certificates are tax free - full stop. In any case, for a bare trust, any tax would have been payable by the beneficiaries, not by the trust.

That was my take on it, but I was being slightly devil's advocate, and it's good to hear that I'm not alone in thinking that.

FAO Parky

I too have trust certificates...not sure if its the 'A' trust or the 'B' trusts but they are requiring BOTH to sign

one requires 2 signatures...so i guess is a joint holding
other only one so i guess is a 'bare' trust

however they do not require any attention when they 'mature' if you rollover...
we have had for many ears, so this is definite
obviously signatures required if cashing in.

they do appear in my (and wifes..as we hold for each other) online accounts but as yet none have rolled over since going online

in my experience much patience is required when ringing NS n I as often you get the easy answer
its ALWAYS worth ringing a couple of times to check answers are the same

mutantpoodle wrote:FAO Parky


however they do not require any attention when they 'mature' if you rollover...
we have had for many ears, so this is definite
obviously signatures required if cashing in.

they do appear in my (and wifes..as we hold for each other) online accounts but as yet none have rolled over since going online

They send you a form when a certificate is due to mature, but they roll over automatically if you do not wish to change the term.

Proposal: split the ILSCs as follows, as long as the two inheritors, X & Y, agree.

Attribute some ILSCs to inheritance A and some to B, with the total capital values being as near equal as possible. Similarly, as near as possible align the maturity dates of the two. Then offer A & B to X & Y, the imbalance in capital value to be corrected by an assignment from other assets.

If X and Y can agree as to which wants which, then just execute the deal. If they can't agree then the matter would be settled by tossing a coin. The threat of a coin toss will incentivise X and Y to agree to make the decision themselves, after due haggling about the balancing assets.

If I were X or Y or U, I'd much prefer this to the notion of using a trust.

Another approach would be to insist on a coin toss thus incentivising X and Y to choose a balancing asset in such a way that each of them would be prepared to accept happily whichever assignment they "won".