My father died recently and left some money to my children, when they reach the age of 18 (they are 8 and 6 now). I am not clear on how I need to handle this money - I believe that I need to create a bare trust for them, but maybe it would be enough to open an investment account in their names?
It's additionally complicated by the fact that we are not living in the UK at the moment, although we expect to be back there again by the time the children are that age. The HMRC website has a section on non-resident trusts with tax rules running to several pages. We could easily make the trustee a UK-based relative rather than DH and me but the children can't be moved so easily.
Or we could of course open an investment account here, but US tax laws are so vastly complicated that I'd really much prefer not to.
As for the inheritance I take it that your father was in the UK and so are the assets whilst you and your children are in the US.
The first thing to establish is what the best inheritance tax position. It may be one of:
a) leave the assets in the UK b) bring the assets to the US c) bring the assets to an offshore jurisdiction
You will most likely need a lawyer in the final jurisdiction of the assets to set things up for you and ensure the inheritance tax position is valid. Ideally a firm with UK and US/offshore experience.
The second thing to decide is how to invest the assets. There are a bewildering number of options, but I would keep it simple, in assets that you can monitor and understand roughly why they might rise and fall in value, in investments that suit your appetite for risk and potential losses and make sure the annual fees are low (less than 1% in total).
I'm marking my place as I have the same dilemma at the moment. My mum has left all her grandchildren a legacy in her will. Ds is the only one under 18 so whilst the rest have had a cheque, we haven't had ds's yet as it won't be released till the rest of the estate is sorted out (house to sell). The solicitors letter mentions trustees and taking investment advice but I'm not clear whether dh and I can be the trustees. I hope so cos I will make bloody sure the money works as hard as possible for him.
So, whilst not wishing to hijack your thread - I'll await your answers as I can't be bothered to pay £210 per hour to ask the solicitor yet!
Sorry I can't be of more help re your UK/US question though.
I am not a lawyer, so you can't rely on my opinions here, but I think that so long as the trustees are not the beneficiaries that's fine. I don't think it's a problem that the trustees and beneficiaries are related.
I'm not sure why a trust is needed though. My children have investments in their name, but they require a guardian to be named on the investment. This is usually just a form provided by the company dealing with the investments. It gives you access to control the investment whilst keeping it in your kids name.
I suspect more important is getting good investment advice. Finding a good financial adviser can be hard. There are 20,000 across the UK that are authorised by the FSA , but, in my opinion, less than half are decent.
Where are you based and how much needs to be invested? I might be able to point you in the right direction.
In the end you could just set up a direct dealing funds account and pick a few funds. Read up on "asset allocation" and "risk profiling". It usually ends up in mixing a blend of cheap passively managed funds that invest in a range of shares, bonds, commodities, property and private equity.
Do make sure that whatever you end up doing you understand how much people charge you in total each year. Keeping the Total Expense Ratio below 1% is hard but a worthy target.