2 sons stand to inherit cash once I get probate, a condition of the will is 
that it's put into a trust (each) until they reach 25 yrs, unless I wish to 
use it for them (e.g. for their education) at my sole discretion).
Any pointers as to where I go for basic advice on how to set up a trust?  Do 
I really need to see a lawyer? (or an accountant?) or is there a DIY 
solution?
Thanks for any advice.

On Mon, 15 Oct 2007 19:25:03 +0100, "John Dee"  wrote:

>2 sons stand to inherit cash once I get probate, a condition of the will is 
>that it's put into a trust (each) until they reach 25 yrs, unless I wish to 
>use it for them (e.g. for their education) at my sole discretion).
>Any pointers as to where I go for basic advice on how to set up a trust?  Do 
>I really need to see a lawyer? (or an accountant?) or is there a DIY 
>solution?
>Thanks for any advice. 
>
You don't need to "set up" anything. If the Will says that the money
goes to you as trustee for your sons, then, as soon as the
administration of the estate is complete you automatically cease to
hold it as Executor or administrator and begin to hold it as trustee;
no formalities are necessary, although it is highly desirable that you
should keep it in a separate bank account, designated as a trustee
account. The main point on which you probably need advice is the tax
implications.

-- 
Don Aitken
Mail to the From: address is not read.
To email me, substitute "clara.co.uk" for "freeuk.com"

On Oct 16, 8:25 am, Don Aitken  wrote:
>
> You don't need to "set up" anything. If the Will says that the money
> goes to you as trustee for your sons, then, as soon as the
> administration of the estate is complete you automatically cease to
> hold it as Executor or administrator and begin to hold it as trustee;
> no formalities are necessary, although it is highly desirable that you
> should keep it in a separate bank account, designated as a trustee
> account. The main point on which you probably need advice is the tax
> implications.
Whilst I agree with Dons opening few words I don't necessarily agree
that you should have a trust account. The problem will centre on the
tax implications the money places on your kids, or if the money is
placed in your name the tax implication of yourself if the money is
kept in your name but using a separate bank account.

Depending on the type of trust you want to use and where you domicile
it depends on the tax implications placed on the money the trust
earns, however if you take the money offshore and bring it back to the
UK to use for your kids educations say, the minute the money hits the
UK it begins to earn interest.

The tax man of two countries could be asking questions at this point.

The things to watch are the ages of your kids and the amounts of money
available, assuming your kids are under 18 and the amount of money is
less than 100grand you maybe better off writing to the tax man telling
him that a sum of money has become available to them to be used just
in there interests and asking him to treat them as adults.

This can be done even if your kids are 1 or 2 years old and all you
need do is provide the tax man with a full accounting of the money
coming into a nominated bank account and the receipts going out. You
can even designate money spent on your car fetching and carrying as
necessary items for your kids welfare

In message <0bOQi.17004$DB2.5724@newsfe1-win.ntli.net>, John Dee 
 writes
>2 sons stand to inherit cash once I get probate, a condition of the will is
>that it's put into a trust (each) until they reach 25 yrs, unless I wish to
>use it for them (e.g. for their education) at my sole discretion).
>Any pointers as to where I go for basic advice on how to set up a trust?  Do
>I really need to see a lawyer? (or an accountant?) or is there a DIY
>solution?
>Thanks for any advice.

The Will is, in effect, the Trust Deed so you dont need any further 
formality. I would advise you to keep the dosh separately from your own 
in a designated account. be aware that the taxation of such trusts 
changed last year and if/when the beneficiaries get older than 18 then 
the Trust will be subject to taxation as though it were a discretionary 
trust.
-- 
John Boyle

On Oct 16, 8:15 pm, John Boyle  wrote:
> In message <0bOQi.17004$DB2.5...@newsfe1-win.ntli.net>, John Dee
>  writes
>
> >2 sons stand to inherit cash once I get probate, a condition of the will is
> >that it's put into a trust (each) until they reach 25 yrs, unless I wish to
> >use it for them (e.g. for their education) at my sole discretion).
> >Any pointers as to where I go for basic advice on how to set up a trust?  Do
> >I really need to see a lawyer? (or an accountant?) or is there a DIY
> >solution?
> >Thanks for any advice.
>
> The Will is, in effect, the Trust Deed so you dont need any further
> formality. I would advise you to keep the dosh separately from your own
> in a designated account. be aware that the taxation of such trusts
> changed last year and if/when the beneficiaries get older than 18 then
> the Trust will be subject to taxation as though it were a discretionary
> trust.

Whilst I agree with some of Johns advise there is a position that the
poster can take to the tax office and that is that the money is for
the beneficial use of the children and he merely administer the money.
if you think about it like this: a wealthy man dies or better still is
involved in a fatal accident, his wife had predeceased him and he had
2 kids aged 1 and 2, clearly the kids are going to inherit alot of
money and if they are treated like kids the tax burden on them will be
harsh.

If amulitimillion pound estate is earning revenue tax is paid at the
highest rate on kids under the age of 18

Tax on underage kids starts at 40% upwards, to prevent wealthy parents
giving income to there kids to bring there own threshold down...it
used to be a person earning say 100grand could give his wife 25grand
and each of his kids 25 grand so that each persons tax payable is on
25each and not tax on a100grand which attracts very high rates of tax.

So a tax declaration that the kids are the beneficial owners of the
money via a will will allow the kids to be treated as adults for tax
purposes and they can then get a better tax deal on the money the get,
they even form a company etc. to lessen future burdens and buy cars
etc

"Tony Holland"  wrote in message 
news:1192535121.906282.141550@t8g2000prg.googlegroups.com...
> On Oct 16, 8:15 pm, John Boyle  wrote:
>> In message <0bOQi.17004$DB2.5...@newsfe1-win.ntli.net>, John Dee
>>  writes
>>
>> >2 sons stand to inherit cash once I get probate, a condition of the will 
>> >is
>> >that it's put into a trust (each) until they reach 25 yrs, unless I wish 
>> >to
>> >use it for them (e.g. for their education) at my sole discretion).
>> >Any pointers as to where I go for basic advice on how to set up a trust? 
>> >Do
>> >I really need to see a lawyer? (or an accountant?) or is there a DIY
>> >solution?
>> >Thanks for any advice.
>>
>> The Will is, in effect, the Trust Deed so you dont need any further
>> formality. I would advise you to keep the dosh separately from your own
>> in a designated account. be aware that the taxation of such trusts
>> changed last year and if/when the beneficiaries get older than 18 then
>> the Trust will be subject to taxation as though it were a discretionary
>> trust.
>
> Whilst I agree with some of Johns advise there is a position that the
> poster can take to the tax office and that is that the money is for
> the beneficial use of the children and he merely administer the money.
> if you think about it like this: a wealthy man dies or better still is
> involved in a fatal accident, his wife had predeceased him and he had
> 2 kids aged 1 and 2, clearly the kids are going to inherit alot of
> money and if they are treated like kids the tax burden on them will be
> harsh.
>
> If amulitimillion pound estate is earning revenue tax is paid at the
> highest rate on kids under the age of 18
>
> Tax on underage kids starts at 40% upwards, to prevent wealthy parents
> giving income to there kids to bring there own threshold down...it
> used to be a person earning say 100grand could give his wife 25grand
> and each of his kids 25 grand so that each persons tax payable is on
> 25each and not tax on a100grand which attracts very high rates of tax.
>
> So a tax declaration that the kids are the beneficial owners of the
> money via a will will allow the kids to be treated as adults for tax
> purposes and they can then get a better tax deal on the money the get,
> they even form a company etc. to lessen future burdens and buy cars
> etc
>
Sorry, this is getting beyond me.!  Does this suggest I should see an 
accountant? Can s/he help limit tax liabilities and/or make more efficient 
provision for the boys?  thanks for all the help so far.

On Oct 16, 1:20 pm, Tony Holland  wrote:
> On Oct 16, 8:15 pm, John Boyle  wrote:
>
>
>
> > In message <0bOQi.17004$DB2.5...@newsfe1-win.ntli.net>, John Dee
> >  writes
>
> > >2 sons stand to inherit cash once I get probate, a condition of the will is
> > >that it's put into a trust (each) until they reach 25 yrs, unless I wish to
> > >use it for them (e.g. for their education) at my sole discretion).
> > >Any pointers as to where I go for basic advice on how to set up a trust?  Do
> > >I really need to see a lawyer? (or an accountant?) or is there a DIY
> > >solution?
> > >Thanks for any advice.
>
> > The Will is, in effect, the Trust Deed so you dont need any further
> > formality. I would advise you to keep the dosh separately from your own
> > in a designated account. be aware that the taxation of such trusts
> > changed last year and if/when the beneficiaries get older than 18 then
> > the Trust will be subject to taxation as though it were a discretionary
> > trust.
>
> Whilst I agree with some of Johns advise there is a position that the
> poster can take to the tax office and that is that the money is for
> the beneficial use of the children and he merely administer the money.
> if you think about it like this: a wealthy man dies or better still is
> involved in a fatal accident, his wife had predeceased him and he had
> 2 kids aged 1 and 2, clearly the kids are going to inherit alot of
> money and if they are treated like kids the tax burden on them will be
> harsh.
>
> If amulitimillion pound estate is earning revenue tax is paid at the
> highest rate on kids under the age of 18
>
> Tax on underage kids starts at 40% upwards,
Not so.  Children have their own tax allowance, and pay tax like
everyone else.  The exception is that income (of more than £100) which
derives from capital given to them by their parents is taxed as if it
was their parents income.  Of course, most parents who can afford to
give their children that much capital (roughly two grand at 5%
interest) are probably paying tax at 40%.  On the other hand, if the
capital is given to the children by doting aunts and uncles it's
fine.

That raises an interesting question.  If I had given my nephew
£100,000 (which would generate roughly the tax free allowance) to be
invested to pay for some of his school fees, and my sister gave my son
a similar amount for a similar purpose, would HMRC be able to raise
any tax on this?

> So a tax declaration that the kids are the beneficial owners of the
> money via a will will allow the kids to be treated as adults for tax
> purposes
That may be the case.  I can imagine that money inherited from a
parent is treated differently to money given by a parent (but consult
an expert).

On Oct 17, 8:45 am, "John Dee"  wrote:
> "Tony Holland"  wrote in message
>
> news:1192535121.906282.141550@t8g2000prg.googlegroups.com...
>
>
>
> > On Oct 16, 8:15 pm, John Boyle  wrote:
> >> In message <0bOQi.17004$DB2.5...@newsfe1-win.ntli.net>, John Dee
> >>  writes
>
> >> >2 sons stand to inherit cash once I get probate, a condition of the will
> >> >is
> >> >that it's put into a trust (each) until they reach 25 yrs, unless I wish
> >> >to
> >> >use it for them (e.g. for their education) at my sole discretion).
> >> >Any pointers as to where I go for basic advice on how to set up a trust?
> >> >Do
> >> >I really need to see a lawyer? (or an accountant?) or is there a DIY
> >> >solution?
> >> >Thanks for any advice.
>
> >> The Will is, in effect, the Trust Deed so you dont need any further
> >> formality. I would advise you to keep the dosh separately from your own
> >> in a designated account. be aware that the taxation of such trusts
> >> changed last year and if/when the beneficiaries get older than 18 then
> >> the Trust will be subject to taxation as though it were a discretionary
> >> trust.
>
> > Whilst I agree with some of Johns advise there is a position that the
> > poster can take to the tax office and that is that the money is for
> > the beneficial use of the children and he merely administer the money.
> > if you think about it like this: a wealthy man dies or better still is
> > involved in a fatal accident, his wife had predeceased him and he had
> > 2 kids aged 1 and 2, clearly the kids are going to inherit alot of
> > money and if they are treated like kids the tax burden on them will be
> > harsh.
>
> > If amulitimillion pound estate is earning revenue tax is paid at the
> > highest rate on kids under the age of 18
>
> > Tax on underage kids starts at 40% upwards, to prevent wealthy parents
> > giving income to there kids to bring there own threshold down...it
> > used to be a person earning say 100grand could give his wife 25grand
> > and each of his kids 25 grand so that each persons tax payable is on
> > 25each and not tax on a100grand which attracts very high rates of tax.
>
> > So a tax declaration that the kids are the beneficial owners of the
> > money via a will will allow the kids to be treated as adults for tax
> > purposes and they can then get a better tax deal on the money the get,
> > they even form a company etc. to lessen future burdens and buy cars
> > etc
>
> Sorry, this is getting beyond me.!  Does this suggest I should see an
> accountant? Can s/he help limit tax liabilities and/or make more efficient
> provision for the boys?  thanks for all the help so far

Nope not at all, it just like you operating your own bank account,
cept you operate it for your kids and keep all records to submit to
the tax office on there behalf, the tax office will treat your kids as
adults if you succeed in persuading them they are the beneficial
owners of the money left to them in a will.....perhaps you should see
a lawyer to get the idea better firmed up in your mind however and ask
him/her to write to the tax man on your behalf...there's plenty of
case law on it so dont panic.

Martin Bonner wrote:

> That raises an interesting question.  If I had given my nephew
> £100,000 (which would generate roughly the tax free allowance) to
> be invested to pay for some of his school fees, and my sister gave
> my son a similar amount for a similar purpose, would HMRC be able
> to raise any tax on this?

I've seen this attempted in the US - and the courts are not kind.  The 
recharacterize the transaction as an artifice where each parent is, in 
reality, making the gift to his own child.

Stu

Hi All,

I have been following this thread with some interest.

While I am not in a position to directly advise anyone on the the very 
intricate nature of Trust Law, I can see that there are some good points of 
advice given in this thread.

I would alwasy advise any individual to seek independant legal advice where 
Trust Law is concerned, for the following reasons;

1. If apointed as Trustee, you are speaking in the singular and from that I 
would assume that you are the sole Trustee, it is always wise to have at 
least two trustees, and you may, as the current Trustee, use your discretion 
to appoint the second, it is one of your powers.
I would normally suggest a Solicitor, or as quite rightly mentioned, an 
accountant.  This way any property that is aquired by the trust will be 
secure. I would advise having a solicitor appointed, while I agree that 
accountans are good at what they do, there is a significant difference in 
the view from behind the spectacles of an accountant, when compared with 
that of a solicitor.  By all means have the Trust accounts audited each year,
 at the cost of the Trust, tax deductable, which will ensure that an 
independant eye is cast over them every 12 month (to detect any missuse of 
the Trust on either party, "it does happen").

2. On the point of the bank account, this may not be the best way of 
investing and maximising the trust money, and the beneficiaries may take 
legal action against you, in the name of the trust, or in their own right, 
once they turn 18, if it is ever shown that you have been negligent in the 
exercising of this power. Many advisors negate this point, and constantly 
view towards the tax implications, the trust pays the tax, and while it is 
important to avoid paying too much tax, from a personal liability point of 
view, leave this to a professional as you will need to strike a balance 
between maximum growth potential and minimum tax liability, which is no easy 
task.

3. Always have two bank accounts for a trust, one for holding investable 
capital and one for accounting for Trust income, for instnace, if you invest 
some of the trust money in shares, have the dividens paid into the income 
account rather than back into the holding account, this way there is no 
"mixing" of the original trust and any earnings that derive from it. Also, 
any interest that arises from the holding account should be transfered into 
the income account. Setting up a trust in this way automatically takes care 
of some of the tax implications, as the main capital is not taxable, only 
the income that is derived from it. In these instances I would agree to 
registereing the chidren to be treated as adults, open a couple of ISA 
accounts and have any gains, up to and including the annual tax free 
allowance transfered into those accounts.  One point that many people 
overlook is that the beneficiaris have a right to any gains that the trust 
makes, not the trust itself as that is retained by the trustees, unless a 
maturity clasue is contained in the trust deed, will or instrument, that 
gives full transfer of the objects of the trust to them, at say 18, 21 or 
otherwise.

4. Always, but always limit your own liability as far as possible, its fine 
and dandy doing things on the cheap but if you slip up by accident the 
lawyers of these children would eat you alive! No lawyer would be able to 
drag you before the courts for spending trust money on legal advice for the 
protection of the trust, think about it, it is still one of the most 
onourous positions any individual can take up, and it is very complicated 
and easy to fall foul of the rules.

5. Lastly, if you are unconfortable with continuing as a trustee, you may be 
able to pass this responsability fully to a solicitor, if you were not 
consulted before the making of the trust deed, will. Consent of a trustee is 
a necessity to make the duty legally binding.

Have fun and dont get too worried about tax, it matters but its not the end 
of the world, the bank may even be able to provide a trust manager to help 
with these matters, for free!!!

bobclark

url:http://myreader.co.uk/msg/130416591.aspx