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Setting up a trust

including wills and probate
teecee90
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Setting up a trust

#156345

Postby teecee90 » July 31st, 2018, 1:51 pm

As joint executor of my Uncles Will I need to make arrangements to set up a discretionary trust to manage the inheritance share of one of his sons who has a learning disability. Can anybody provide any practical advice on how to go about this or is it something that needs to be done with the help of a solicitor?

Thanks

pochisoldi
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Re: Setting up a trust

#156435

Postby pochisoldi » July 31st, 2018, 8:41 pm

teecee90 wrote:As joint executor of my Uncles Will I need to make arrangements to set up a discretionary trust to manage the inheritance share of one of his sons who has a learning disability. Can anybody provide any practical advice on how to go about this or is it something that needs to be done with the help of a solicitor?

Thanks


Personally I'd engage a solicitor - I think the setup costs will come out of the estate, but the running costs can come from the trust.

If you aren't certain/happy about how to the job, then it would be silly not to instruct a solicitor (in your role as executor), because if you make a hash of it you'll have the Official Solicitor* on your back protecting the interests of you Uncle's son.

PochiSoldi

(* See https://www.gov.uk/government/organisat ... ic-trustee )

Clitheroekid
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Re: Setting up a trust

#156473

Postby Clitheroekid » August 1st, 2018, 12:18 am

At the risk of being accused of having a vested interest this is an area where you must take proper professional advice.

As a trustee you can be made personally liable for any errors you make that result in a loss to the trust. This is bad enough when you're being paid to act as a trustee, but is completely unacceptable when you're doing it voluntarily.

As pochisoldi said, any professional fees that you incur will be paid by the estate.

Parky
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Re: Setting up a trust

#156509

Postby Parky » August 1st, 2018, 9:04 am

I agree you need professional advice, but my approach was a bit different. I went to a financial advisor who could advise on the investment and tax issues. He had a relationship with a solicitor who produced the trust deed (i.e. printed off a framework from his computer and adapted it to suit). I thought the financial adviser would be better to manage the trust.

teecee90
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Re: Setting up a trust

#156535

Postby teecee90 » August 1st, 2018, 10:31 am

Thanks for the responses. I've got a list of local solicitors with trust fund experience from the law society website and will ringing round for quotes.

Interesting point about doing it via a financial advisor, although this is a relatively small inheritance of about £45k so not sure that specialist financial advice would be necessary or cost effective.

Cheers

Dod101
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Re: Setting up a trust

#156543

Postby Dod101 » August 1st, 2018, 10:55 am

I had a pretty poor experience using a financial advisor and you need to watch that costs do not eat up the income. I think you are right to use a solicitor and mug up on the issues re tax and so on for running the trust, assuming that is that you are to be a trustee.

Dod

stewamax
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Re: Setting up a trust

#156549

Postby stewamax » August 1st, 2018, 11:12 am

STEP practitioners specialise in trusts and inheritance planning: see https://www.step.org
Usual disclaimers (i.e. I ain't one!)

Parky
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Re: Setting up a trust

#156586

Postby Parky » August 1st, 2018, 3:45 pm

As often in these discussions, information is starting to emerge which makes me think that the correct course of action is by no means obvious.
First, with "only" £45000 in play, costs for setting up and running a discretionary trust will be a significant percentage of the capital, particularly as the OP wants the solicitor/adviser to manage the Trust.
Dod recommended "mugging up" on running the trust. Fine, but running a discretionary Trust is not a trivial activity. There is HMRC to deal with, tax returns etc., registering the trust, opening trust accounts, obtaining a Legal Entity Identifier to enable you to trade investments, and so on. I do all this myself, but it has taken me several years and much stress to do what I hope is a reasonable job.

Have you thought about what is the purpose of the Trust, e.g to provide an income, to provide for emergency expenditures, to provide a long-term investment. The best way forward may be different for each one. That's why I suggested financial advice is needed first. (interestingly, my experience is the opposite of Dod's. I have had poor service from solicitors on financial matters, but good service from a financial adviser, whose initial advice on what to do was free.)

Dod101
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Re: Setting up a trust

#156591

Postby Dod101 » August 1st, 2018, 4:28 pm

My first wife had a Discretionary trust set up through her Will. The idea in these days was to save on IHT I think. However there was a lot of hassle not to mention expense and so I got it wound up as soon as I could and used my discretion as a trustee to simply divi the assets up amongst the potential beneficiaries. I used a solicitor to set it up and administer it and an IFA to begin with to invest. He was a disaster. I had though used the solicitor for many years and he was good.

The capital was well into 6 figures but even then a large proportion of the income was used in fees.

Dod

teecee90
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Re: Setting up a trust

#156601

Postby teecee90 » August 1st, 2018, 4:46 pm

Juts to clarify a few more things. My Uncle has two sons, each of whom will inherit an equal share of the estate. One son has a learning disability, is 40ish years old but has been assessed as having a mental age of 6-7 years old. He lives in supported accommodation and can look after himself reasonably well (cooking, cleaning etc), but cannot read or write and has absolutely no concept of the value of money. He is currently living on benefits and has no other source of income.

The Will specifies that his share of the estate is to be placed into a discretionary trust with me and the other son as trustees. The inheritance will basically be used to supplement his benefits and make his life a little bit easier for as long as possible. It will be used to help out with household expenses when necessary, any relatively 'big' new purchases like a new TV, new bicycle, washing machine etc. The occasional treat like a holiday or a meal out. There is no plan at this stage to use the trust to provide him with a fixed/regular income stream as quite frankly he isn't capable of properly managing the money he already gets in benefits. The plan is that the Trustees will purchase the items he needs or pay any bills directly rather than handing over any money.

I'm convinced that we will need a solicitor to get the trust set up and registered, but don't envisage any ongoing professional involvement after that, either legal or financial. I don't want to over-complicate the financial side of things and was thinking of perhaps retaining £10k in cash and putting the remainder into some form of relatively low risk / low fee passive fund (all suggestions welcome). I'm an accountant by profession so am confident that I can manage any tax issues (albeit not my area of expertise).

Cheers

genou
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Re: Setting up a trust

#156607

Postby genou » August 1st, 2018, 5:00 pm

teecee90 wrote: I'm an accountant by profession so am confident that I can manage any tax issues (albeit not my area of expertise).


Probably unneeded, but I take it you are aware of this - https://www.gov.uk/trusts-taxes/trusts- ... ble-people

didds
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Re: Setting up a trust

#156609

Postby didds » August 1st, 2018, 5:21 pm

will his inheritance amount affect his benefits?

(merely a thought - Ive no idea)

didds

genou
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Re: Setting up a trust

#156612

Postby genou » August 1st, 2018, 5:31 pm

didds wrote:will his inheritance amount affect his benefits?

(merely a thought - Ive no idea)

didds


I think that is the object of having the trust as discretionary. If it was IIP, it would; but since he has no entitlement to any income, it should not.

Parky
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Re: Setting up a trust

#156614

Postby Parky » August 1st, 2018, 5:39 pm

teecee90 wrote:I'm convinced that we will need a solicitor to get the trust set up and registered, but don't envisage any ongoing professional involvement after that, either legal or financial. I don't want to over-complicate the financial side of things and was thinking of perhaps retaining £10k in cash and putting the remainder into some form of relatively low risk / low fee passive fund (all suggestions welcome). I'm an accountant by profession so am confident that I can manage any tax issues (albeit not my area of expertise).

Cheers



teecee90. Thanks for the clarification. As an accountant you will probably make a better job of managing the Trust than I have with mine. If you are lucky, you may also have a contact who can keep you up-to-date on changes in Trust taxation and regulations.

PinkDalek
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Re: Setting up a trust

#156622

Postby PinkDalek » August 1st, 2018, 6:43 pm

genou wrote:
teecee90 wrote: I'm an accountant by profession so am confident that I can manage any tax issues (albeit not my area of expertise).


Probably unneeded, but I take it you are aware of this - https://www.gov.uk/trusts-taxes/trusts- ... ble-people


That helpful link mentions Personal Independence Payments, which seem to be replacing or have replaced Disability Living Allowance. If those are the state benefits the cousin receives, I believe they are not means tested.

Some information here https://www.gov.uk/pip

teecee90
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Re: Setting up a trust

#166252

Postby teecee90 » September 14th, 2018, 10:43 am

I have now appointed a local solicitor experienced in trusts to set up the trust deed and register the trust with HMRC as a vulnerable beneficiary trust. The solicitor advised against appointing an IFA due to the likely cost compared to the modest size of the trust fund. However, having made a few initial enquiries with brokers/platforms such as Halifax and Vanguard it seems that making investments in the name of the trust is not as easy as I first thought. So far, the response has been that they will only accept account applications for personal accounts, not an account in the name of a trust, so I'm not sure how in practical terms I am going to get the money invested. I posted a question in the "How do I Invest" section but without much success so wondered whether this board might be more fruitful. Any advice or guidance on this aspect would be appreciated.

Parky
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Re: Setting up a trust

#166316

Postby Parky » September 14th, 2018, 1:21 pm

I think Alliance Trust Savings still offer Trust Accounts BUT they add an annual charge of £385 on top of the normal investment platform charges of £10 per month. In addition you have to obtain a Legal Entity Identifier from the Stock Exchange (£135 first year plus £35 per year renewal) before you can trade. The on-line LEI application form is a nightmare as it is designed for companies rather than trusts, but in fact as a trust you have only a few boxes to fill in.(The problem is working out which ones!)

Clitheroekid
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Re: Setting up a trust

#166482

Postby Clitheroekid » September 14th, 2018, 11:10 pm

teecee90 wrote:However, having made a few initial enquiries with brokers/platforms such as Halifax and Vanguard it seems that making investments in the name of the trust is not as easy as I first thought. So far, the response has been that they will only accept account applications for personal accounts, not an account in the name of a trust, so I'm not sure how in practical terms I am going to get the money invested.

I would query whether it’s really necessary to set the trust up at the platform with a specific ‘trust’ type name. After all, it’s only a label, and the legal nature of the investment and its beneficial owners is not defined by that label.

Consequently, if you were to make the investment in your own name or the joint names of yourself and your co-trustees I can’t see it making any practical difference. You know it’s a trust; your co-trustees know it’s a trust; it will be administered in accordance with trust law, so the actual label would seem irrelevant.

The only obstacle that may exist is if you have to sign a declaration confirming that you’re the beneficial owner - but without having seen the application form I simply don’t know whether you would or not.

Charlottesquare
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Re: Setting up a trust

#166496

Postby Charlottesquare » September 15th, 2018, 3:20 am

teecee90 wrote:I have now appointed a local solicitor experienced in trusts to set up the trust deed and register the trust with HMRC as a vulnerable beneficiary trust. The solicitor advised against appointing an IFA due to the likely cost compared to the modest size of the trust fund. However, having made a few initial enquiries with brokers/platforms such as Halifax and Vanguard it seems that making investments in the name of the trust is not as easy as I first thought. So far, the response has been that they will only accept account applications for personal accounts, not an account in the name of a trust, so I'm not sure how in practical terms I am going to get the money invested. I posted a question in the "How do I Invest" section but without much success so wondered whether this board might be more fruitful. Any advice or guidance on this aspect would be appreciated.


We have a small IIP trust arising from my late father's estate, the family solicitor managed to open an account with Hargreaves Lansdown (on my rec as I use them myself) as the platform for the investments made, as he set it up, not I , I am not sure how difficult it was, maybe they are more geared for such accounts via a solicitor.

We have the advantage that the solicitor in question is my late father's ex junior partner (my father was a solicitor) so his costs are very modest, circa £200 plus vat per year.

Not sure if this helps but it is obviously possible with HL.

Jabd2001
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Re: Setting up a trust

#166502

Postby Jabd2001 » September 15th, 2018, 7:21 am

I think you will just have to work through the main DIY brokers until you find one which will take a trust account - Hargreaves, Youinvest, ATS, interactive investors, Charles Stanley Direct all worth a try.
For cash, national savings take trust accounts. A very few other institutions do, again, needs going through each one individually.


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