Managing a Trust
Discussion
After more than 2 years of legal paperwork, I'm currently now in the situation of being a trustee for a lump sum due to three kids - aged 15, 7 and 4 - on their respective 25th birthdays.
Ths solicitor dealing with it so far was a replacement when the original one became chronically ill and retired. She's managed to get there in the end, but has had to take advice at every step along the way. So I'm in the situation where if I ask her for advice then I might not get the correct answer and it certainly won't be quick. I'd therefore appreciate advice from any financial advisors or solicitors on here who have experience in this area.
We are at the stage where the money is sitting at the solicitors and we need to work out what to do with it.
There are 2 trustees and 3 kids. The proposal is that we split the money 3 ways now. One third will then be managed by the other trustee, who is the legal guardian of the older kid, and I will manage the money for the two younger kids (we have adopted the youngest; the middle child stays with us in the holidays and is likely to move in permanently within the next 5 years). If we did this, would we need to draw up any kind of formal agreement that
a) the split in money has happened now, not later (important since the 2 different pots will be managed very differently)
b) we trust each other to make day to day decisions on how the money is managed and spent without having to run everything past each other (we could maybe have an annual review of accounts?)?
On top of that, I've been looking at how to invest the money long term that's going to provide a decent and safe return. The only sure fire way would be to borrow the money myself at say 5% APR and place it into a drawdown mortgage. We'd then pay interest on this sum back into the trust on a monthly basis, to be invested elsewhere. If we did this over 10 years (which is when the 2nd child would start to need it for uni etc), we'd have doubled the original sum at minimum. We'd then have to pay the original sum back or renegotiate another loan.
This was somebody else's suggestion, and although I was quite against it at first (I've seen an entire fund stolen by relatives through the financial adviser managing the money), I genuinely can't think of a safer way to get that kind of return on investment. The original deed says the money can be invested into property or loaned. The only thing is how would I do this to make sure it's all above board and watertight?
Ths solicitor dealing with it so far was a replacement when the original one became chronically ill and retired. She's managed to get there in the end, but has had to take advice at every step along the way. So I'm in the situation where if I ask her for advice then I might not get the correct answer and it certainly won't be quick. I'd therefore appreciate advice from any financial advisors or solicitors on here who have experience in this area.
We are at the stage where the money is sitting at the solicitors and we need to work out what to do with it.
There are 2 trustees and 3 kids. The proposal is that we split the money 3 ways now. One third will then be managed by the other trustee, who is the legal guardian of the older kid, and I will manage the money for the two younger kids (we have adopted the youngest; the middle child stays with us in the holidays and is likely to move in permanently within the next 5 years). If we did this, would we need to draw up any kind of formal agreement that
a) the split in money has happened now, not later (important since the 2 different pots will be managed very differently)
b) we trust each other to make day to day decisions on how the money is managed and spent without having to run everything past each other (we could maybe have an annual review of accounts?)?
On top of that, I've been looking at how to invest the money long term that's going to provide a decent and safe return. The only sure fire way would be to borrow the money myself at say 5% APR and place it into a drawdown mortgage. We'd then pay interest on this sum back into the trust on a monthly basis, to be invested elsewhere. If we did this over 10 years (which is when the 2nd child would start to need it for uni etc), we'd have doubled the original sum at minimum. We'd then have to pay the original sum back or renegotiate another loan.
This was somebody else's suggestion, and although I was quite against it at first (I've seen an entire fund stolen by relatives through the financial adviser managing the money), I genuinely can't think of a safer way to get that kind of return on investment. The original deed says the money can be invested into property or loaned. The only thing is how would I do this to make sure it's all above board and watertight?
Edited by oldbanger on Saturday 23 April 14:44
http://tinyurl.com/6augmd9
More seriously, the solicitors you have been dealing with may be able to recommend a firm.
More seriously, the solicitors you have been dealing with may be able to recommend a firm.
fergywales said:
http://tinyurl.com/6augmd9
More seriously, the solicitors you have been dealing with may be able to recommend a firm.
yes I have googled ad nauseamMore seriously, the solicitors you have been dealing with may be able to recommend a firm.
the solicitors are recommending a firm of financial advisors - who are not going to be able to advise on legal aspects of the trust, I assume
If you find a decent IFA with experience of advising on trusts there shouldn't be a problem tbh. The trust / will will document all that is required to know how the funds can be invested. One thing you need to be aware of is that under the Trustee Investment Act, trustees are required to take appropriate investment advice unless they have the professional experience themselves. In order to ensure that you do not have a later challenge by a beneficiary, it would be worth doing this imo. I would be a little wary of borrowing the money from the trust without a legal agreement drawn up as the last thing you want is a suggestion at a later date that you had been fiddling things.
Trust money should not be held in cash for any length of time unless pending investment. It would probably be worth investing the capital in OEICs etc if the investment term is long enough to justify it - holding it in cash is only going to devalue the funds long term. Trust investment does not need to be as complex as many fear.. it really can be pretty straightforward.
Trust money should not be held in cash for any length of time unless pending investment. It would probably be worth investing the capital in OEICs etc if the investment term is long enough to justify it - holding it in cash is only going to devalue the funds long term. Trust investment does not need to be as complex as many fear.. it really can be pretty straightforward.
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