Family trust account

[Simoted]

I’m wondering if any of you have ever setup a family trust account?. Me and my siblings have inherited money which we want to gift to our mam (which we are doing so by a ‘deed of variation’). We have paid a solicitor to setup this deed and create a trust in our name. The problem I have now is actually opening an account for the money to go into. Most banks seem to have stopped doing them.

Has anyone any ideas on the best way of doing this?, also do I need to register the trust with HMRC. It’s below inheritance tax levels and no more money will be going into. A house will be purchased in the trusts name.

[C69]

If you're looking for a bank account for the trust, have you tried Cater Allen?

[adccl8z]

I used Bath Building Society for a few years. The interest rate was paltry. I did look to move elsewhere but lots of new form filling, and in person visit required for set up. So I stuck with Bath. Closed the account a few years back as no longer needed.

[Simoted]

C69 said:

If you're looking for a bank account for the trust, have you tried Cater Allen?

I have looked at Cater Allen and metro online banking. I was going to call Cater Allen tomorrow.

[Simoted]

adccl8z said:

I used Bath Building Society for a few years. The interest rate was paltry. I did look to move elsewhere but lots of new form filling, and in person visit required for set up. So I stuck with Bath. Closed the account a few years back as no longer needed.

I’m not sure how long we will need it. We want the inheritance money to go in, then purchase a house using the trust. I take it the remaining funds could then be put into personal savings accounts at some point. Would we still actually need a trust account at that point. We are quite happy for my mam to put the remaining into savings.

[Panamax]

Simoted said:

We have paid a solicitor to setup this deed and create a trust in our name.

The solicitor should be able to say which banks can run a trust account for you.

Leaving that aside, it sounds unusual to me for a gift/trust to be used "upwards" through generations rather than "downwards". Why isn't someone else buying the property and just letting Mam live there?

[Simoted]

Panamax said:

The solicitor should be able to say which banks can run a trust account for you.

Leaving that aside, it sounds unusual to me for a gift/trust to be used "upwards" through generations rather than "downwards". Why isn't someone else buying the property and just letting Mam live there?

It is a strange situation. It was always intended that we would gift my mam the money. The best way we could find is by a deed of variation so we forego our share of the money. We did think about buying the house in our name and letting mam live there for free but we aren t sure of any tax implications etc. Or what happens if a sibling happens to get divorced and their partner classes that as their asset. We were advised to set up a trust that she can use and put the money into the trust. Which is what we are in the process of doing. We just need to find a suitable account and also see if we need to register it with HMRC.

Edited by Simoted on Monday 14th July 20:23

[LooneyTunes]

Simoted said:

Panamax said:

The solicitor should be able to say which banks can run a trust account for you.

Leaving that aside, it sounds unusual to me for a gift/trust to be used "upwards" through generations rather than "downwards". Why isn't someone else buying the property and just letting Mam live there?

It is a strange situation. It was always intended that we would gift my mam the money. The best way we could find is by a deed of variation so we forego our share of the money. We did think about buying the house in our name and letting mam live there for free but we aren t sure of any tax implications etc. Or what happens if a sibling happens to get divorced and their partner classes that as their asset. We were advised to set up a trust that she can use and put the money into the trust. Which is what we are in the process of doing. We just need to find a suitable account and also see if we need to register it with HMRC.

That seems like a very odd way of doing it, unless you have the classes of trust beneficiaries defined so that it all ends up back with you without any IHT/other tax implications.

[happytobealive]

I have a Cater Allen account for a trust. I also setup a Wise account for the same trust, as the fees if you want to do anything in the account were much much lower. It was a slight pain, involving uploading the deed and answering some inane questions. But perfectly doable.

[Simoted]

LooneyTunes said:

That seems like a very odd way of doing it, unless you have the classes of trust beneficiaries defined so that it all ends up back with you without any IHT/other tax implications.

The inheritance falls a little below the threshold for inheritance tax. We don’t want the house in mams name incase something happens and she ends up in care. Technically the money should really be hers but she was taken out of the Will around 15 years ago.

We were advised the best way to do this was to setup a family trust where we all put the money into and then she can use it to purchase her rented house, in the trusts name (so it can’t be taken off her).

[Panamax]

It all sounds bizarrely complicated to me.

Do you have good confidence in the solicitor who's giving advice?
Who are going to be the trustees of this trust?
Who is going to prepare the trust annual accounts?
Who is going to do the trust's annual tax return?
Who is going to deal with registering the trust at HMRC and the annual update of that registration?
What is the budget for annual running costs of the trust?
How will the trust meet those running costs?
How will the trust pay for any repairs needed to the house?
Will there be other assets in the trust to enable it to run itself?

[Panamax]

Simoted said:

setup a family trust where we all put the money into and then she can use it to purchase her rented house, in the trusts name (so it can t be taken off her).

Why doesn't she just carry on renting?

Are there "money trustworthiness problems" somewhere in the family?

[Simoted]

Panamax said:

Why doesn't she just carry on renting?

Are there "money trustworthiness problems" somewhere in the family?

The landlord wants to sell the house, My mam doesn’t want to move. Also the cash is there to buy the house.

[Simoted]

Panamax said:

It all sounds bizarrely complicated to me.

Do you have good confidence in the solicitor who's giving advice?
Who are going to be the trustees of this trust?
Who is going to prepare the trust annual accounts?
Who is going to do the trust's annual tax return?
Who is going to deal with registering the trust at HMRC and the annual update of that registration?
What is the budget for annual running costs of the trust?
How will the trust meet those running costs?
How will the trust pay for any repairs needed to the house?
Will there be other assets in the trust to enable it to run itself?

Will there be that much work involved if no more money is ever going in?.

[chrisr29]

Can you not just buy her the house but have her leave it back to the family members in her will?

Trust sounds a bit overly complicated.

[Simoted]

chrisr29 said:

Can you not just buy her the house but have her leave it back to the family members in her will?

Trust sounds a bit overly complicated.

We would have to buy the house between three of us then gift her the rest of the money. Does that not have tax implications?.

It is starting to sound more complicated than it needs to be, even to me!.

[Jon39]

Simoted said:

chrisr29 said:

Can you not just buy her the house but have her leave it back to the family members in her will?

Trust sounds a bit overly complicated.

We would have to buy the house between three of us then gift her the rest of the money. Does that not have tax implications?.

It is starting to sound more complicated than it needs to be, even to me!.

I have used gift of variation in the past.
As you know, there are no taxable gift implications with that.

I cannot understand what the advantage is of you using a trust.
It sounds as though three of you will gift money to the trust (I suppose the 7 year rule applies to those gifts), then the trust buys a property.
What are the implications of a trust being the owner of property?
Surely it cannot magically avoid CGT or gift taxes?
Does the trust then pass ownership of the property to your mother?

You say no money will be going into the trust, but then mention the trust will buy a property.
How does the trust pay for the property?

Did your solicitor talk about the various aspects.

If the three of you bought the property jointly, then CGT would of course be applicable to any of you already home owners.

It is all very intriguing. So many questions.

[C69]

Simoted said:

chrisr29 said:

Can you not just buy her the house but have her leave it back to the family members in her will?

Trust sounds a bit overly complicated.

We would have to buy the house between three of us then gift her the rest of the money. Does that not have tax implications?.

It is starting to sound more complicated than it needs to be, even to me!.

What do your mother's total assets look like at the moment? Would her estate currently be liable for inheritance tax?

What would your mother's total assets look like if the three of you just gave her the money (via deed of variation) to buy the house? Would her estate then be liable for inheritance tax (taking into account her nil rate band and residence nil rate band)?

I think that buying the house between the three of you and letting her live in it could potentially have unseen complications later on. For example, what would happen if any of the three of you were to die / get divorced / decide you desperately need to liquidate your share of the house while your mother is still alive?

There are lots of variables to consider!

[Simoted]

The main reason we are doing this is due to the fact my dad has just had a stroke and now needs to be in a care home. They currently haven’t got enough money to pay for this care so it will be paid by the local authority.

Now my dad isn’t working they haven’t really got the income to purchase the house or continue paying the rent (for mam).

If we gifted mam the money directly (by deed of variation). Which is what we were going to do. Will she then have to pay for his care. Also if mam went the same way, the money would disappear into paying for her care.

As she’s never had the money, we were advised to create a trust to put the money into, so it isn’t my parents. We can then purchase the house, which won’t be hers. The money left over in the trust can be used or some of it taken out and gifted to my mam.

The total of the money does not go over the inheritance tax threshold.

I hope that makes a bit more sense.

[Jonmx]

Nothing to add, but looking to set up a trust for my disabled son and can utterly sympathise at how bloody daunting and complicated everything is. Hope you get it sorted. Also a hat nod for having a proper family relationship with siblings who are like minded.