Trust Fund Beneficiary


T

thescullster

Hi all

My children have been left money in my parents' will.
However, they have no access to capital until age 25, so the intention
is to put the capital in a Trust account and have interest mandated to them.

The question is, can the size of investment be witheld from them during
the Trust setup process? (Yes I know that if it was clear the interim
payments were interest they would be able to work out the capital sum
for themselves)

The sum of money is significant and I don't want the promise of future
inheritance to divert them away from the real business of sorting a
career path. Childrens' ages are between 18 and 22.

Thanks

Phil
 
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D

David Woolley

thescullster said:
My children have been left money in my parents' will.
However, they have no access to capital until age 25, so the intention
is to put the capital in a Trust account and have interest mandated to
them.
Given that one will not gain access to the capital for six to seven
years, and assuming the only restrictions on investments are those in
the legislation, if the amount is really quite large, a bank/building
society trust account is probably not going to be an appropriate
investment. If the amount is large, there is a duty for the trustees to
get advice from a competent person.
The question is, can the size of investment be witheld from them during
the Trust setup process? (Yes I know that if it was clear the interim
payments were interest they would be able to work out the capital sum
for themselves)
I would suspect that all the information is in the public domain and
that executors would be under a duty to inform the grand-children of the
details, but I don't know for certain. The trustees would be under a
moral obligation to honour the known wishes of the grandparents, and not
to impose constraints that the grandparents would not have imposed.
The sum of money is significant and I don't want the promise of future
inheritance to divert them away from the real business of sorting a
career path. Childrens' ages are between 18 and 22.
The exact wording or the will may be important in relation to the tax
rate on the interest.

I am fairly sure that a trust will be established if it looks like a
trust, even if the will doesn't actually use the word "trust".
 
T

thescullster

Given that one will not gain access to the capital for six to seven
years, and assuming the only restrictions on investments are those in
the legislation, if the amount is really quite large, a bank/building
society trust account is probably not going to be an appropriate
investment. If the amount is large, there is a duty for the trustees to
get advice from a competent person.


I would suspect that all the information is in the public domain and
that executors would be under a duty to inform the grand-children of the
details, but I don't know for certain. The trustees would be under a
moral obligation to honour the known wishes of the grandparents, and not
to impose constraints that the grandparents would not have imposed.

The exact wording or the will may be important in relation to the tax
rate on the interest.

I am fairly sure that a trust will be established if it looks like a
trust, even if the will doesn't actually use the word "trust".
Thanks David

I would not be comfortable specifying any level of risk with this
capital. Having consulted an IFA, he says that (based on the no risk
premise) bank/savings accounts are the only option. One child has 4
years of investment time remaining, the other has 7. The concern is
that, certainly over 4 years, the market/investment may well not be able
to recover from any dips.
I don't believe that witholding the capital sum amount in any way
contravenes the intent of the will.

Phil
 
A

AnthonyL

I don't believe that witholding the capital sum amount in any way
contravenes the intent of the will.
But surely if the Will has gone to probate the information will be
publicly available anyway unless it was a secret trust?
 
D

David Woolley

thescullster said:
I would not be comfortable specifying any level of risk with this
capital. Having consulted an IFA, he says that (based on the no risk
But your starting premise was that the grandchildren should become
financially independent without it, which implies that you can take
reasonable risks.
premise) bank/savings accounts are the only option. One child has 4
If you tell an IFA that your risk tolerance is very low, the only option
they will ever offer, for however long a period, is a bank/BS account,
or probably several, with no more than £85,000 in each.

As a trustee, you are expected to make a risk decision based on the
nature of the trust and to mitigate the risks by having plenty of
diversity. You should probably be asking the beneficiaries as to their
acceptable risk level.
 
T

thescullster

But your starting premise was that the grandchildren should become
financially independent without it, which implies that you can take
reasonable risks.


If you tell an IFA that your risk tolerance is very low, the only option
they will ever offer, for however long a period, is a bank/BS account,
or probably several, with no more than £85,000 in each.

As a trustee, you are expected to make a risk decision based on the
nature of the trust and to mitigate the risks by having plenty of
diversity. You should probably be asking the beneficiaries as to their
acceptable risk level.
Thanks David

I will discuss your comments with my sister (co-executor) to decide on
an agreed level of risk.

Phil
 
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T

thescullster

But surely if the Will has gone to probate the information will be
publicly available anyway unless it was a secret trust?
Thanks Anthony

Publicly available where and in how much detail?

New to all this!

Phil
 
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