Trust Funds for children (not the Child Trust Fund)

[Pleiades45]

My children have been very fortunate to inherit some money from my Aunt. The amount is substantial and will allow them a college fund should they wish it and if it is invested properly.

I don't know what to do with it!

Should I get an accountant to set up Trust Funds and manage for them? Is there an alternative?

Also, myself and one other are listed as Trustees of the will. Does this mean we both have to be involved or can I do this alone? I don't want this to get messy but I know the other person doesn't want to be involved from this point on.

[CogitoErgoSometimes]

Setting up a family trust fund is a potentially complicated matter for which you'll need legal advice. Who the trustees are and how they invest the money on your children's behalf is a legal matter, a financial matter and potentially a tax matter.

There are some commerically available investment funds, aimed at children & designed to mature when the children reach 18 or 21. This 'Investment Plan for Children' product from Aberdeen Investment Trust, is one example.

If the substantial amount is in the tens of thousands or higher, then I'd strongly recommend you talk to an independent financial adviser and ask their opinion on what would be the best way forward.

When you say you are a 'trustee of the will' do you mean you are an executor? Or has the legacy to your children already been organised as a trust and you and this other person are trustees?

[trustfundkids]

How interesting - we are going through this ourselves with our children who have inherited from an elderly relative. Yes you need legal advice, someone on here recommended lookinf for a STEP registered lawyer (society of estates and trust practitioners) - they have a searchable website. Existing trustees can retire and new ones can be appointed, but this needs to be done with legal advice. We went through this as the trustees appointed by the Will wanted to hand over responsibility to us.
You are bound as a trustee by whatever provisions were made in the will, and by trust law. You need top be clear about your own particular circumstances.

[yeahyeahitsallmyfault]

An IFA with a G10 or AF1 qualification would also be able to advise you (I would also suggest that they may be Chartered or a Fellow of the CII - this is top qualifications for this profession), many are also STEP qualified. We also work closely with Trust lawyers and it is a specialist area. Basically the trustees in a will trust are the same as the executors unless trustees are named separately (as the beneficiaries are minors a trust is automatically formed of the funds). trustfundkids is correct to say that the Trustees Act allows change of trustees for various reasons, refusing to act/retiring are just one.

As a trustee you are legally responsible for investments of the fund as there are strict investment guidelines:

The trustees should invest in accordance with the trust deed/Trustee Act 2000.
? Trustees can make investments as if they were absolutely entitled to trust assets, subject to the standard investment criteria, bound by duty of care.
? Trust investments must be suitable for the trust, in terms of size/risk and must be diversified.
? The trustees must obtain and consider proper investment advice from someone appropriately qualified and experienced, unless the trustees have the necessary skills and knowledge themselves, or they consider it unnecessary or inappropriate to do so.
? The investment should also be reviewed from time to time and varied as appropriate.
I know I?m making this sound onerous; my point is that acting as a Trustee is more than a matter of putting the money into an account.
During the accumulation period, there are also legal issues to address with regards distribution of the money or conversion to capital of receipts... I could go on (tax issues at 18, when to they receive the capital).

Hence my point, you need good investment and legal advice! Don't be put off though, it really isn't that bad (with advice). Also advice is likely to be cheaper than using a corporate trustee. I would only suggest this is you are talking a decent 6 figures or over.

[Pleiades45]

Thanks for the replies. I'm going to see an accountant next week.

Myself and other person were listed as executors and trustees for the will. My childrens money is to be put in trust until they are 18. I'm happy with this. The other person however, took responsibility as executor of the will and has made it clear they don't care what happens to the boys share from this point on. So I really don't want to be having to chase them down every few years to make sure they are happy with investment and to get signatures. I'm happy enough to take it on from here. I've told the accountant, I have concerns about this so she's going to take a look at the will and see what we can do.

[yeahyeahitsallmyfault]

You have the right to replace (the important point here) the trustee under the Trustees Act 1925 S.36. They can retire without being replaced under S.39. but you need at least 2 trustees to remain (or a corporate trustee). Therefore you'll need another trustee. Is there someone within your family that would take on the role? I don't think the will would be relevant in this instance unless it specifies an appointor (person that will appoint trustees).

[Pleiades45]

that's interesting information as at least I know it can be changed.

The only person really is my husband. My own family are terrible with communication, etc and I really don't want to get myself or the children into an awkward situation in later years; as the older generation are leaving us the younger ones are showing no cohesion.

I've checked the will there is no appointor, it just cites the Standard Provisions of the Society of Trust and Estate Practitioners Edition 1.

[yeahyeahitsallmyfault]

I would think your husband is a suitable replacement. If you google STEP (society of estate and trust practitioners) I'm sure you'll be able to find someone in your area to advise you.

www.step.org/system_pages/call_to_action_navigation/search_for_a_step_member.aspx?link=link