Trust fund - where do I begin?

[Foslady]

Dd has been left a sizeable amount of money from her granddad’s estate. I know he wanted it to be used for a house deposit when she is older and I always thought he’d stipulated in his will it was to go in trust until she was 25.
Sadly he passed away when she was 15. The estate is in process of being sorted and I was informed the money has been released for her and we need to look at investment.
Dd does not want to have access u til she is 25 either - she wants to have time to finish her education and start to stand on her own two feet being used to money before she gets the cash (which is a relief that she’s got the attitude!).
But where do I begin? Do I speak to a solicitor, an investment manager, bank? This is a whole new world to me.

[MissConductUS]

The solicitor handling the estate can advise you on setting up a simple trust for her to hold the money. It sounds like about a 10 year time frame until she may need the money, so I'd invest in something moderate risk like the Vanguard Lifestrategy 60% equity fund:

www.vanguardinvestor.co.uk/what-we-offer/life-strategy-products

This is a very low cost, efficient way to invest in a highly diversified mix of stocks and bonds. Rather than picking individual bonds and shares these funds buy and hold entire indexes of them. Have a look at the rest of the Vanguard website to learn more.

[Foslady]

Thank you! I’ll speak to her dad (paternal granddad) and see about booking an appointment with the solicitor handling the estate so we both are there for it

[MissConductUS]

You're quite welcome! Happy to be of service.

[Hortz]

I think you need to get professional advice about two things. First setting up the trust and secondly on investment (though MissConductUS's suggestion is a good one depending how much money is involved.)

Think carefully about tying it up until she is 25. She could easily be wanting to buy a house before that. My elder DS is 23 and several of his friends have bought houses (we are not in London).

DH and I drew up new wills when the DC were around 14/15 and we set up trusts so that they could access some money at 18, some at 21 and the bulk at 25.
Last year when DC were 22/20 we decided that, should the worst happen and we both die they are perfectly capable of managing the money themselves now so we removed all trusts.

[MissConductUS]

Getting independent advice on the investments is a great idea as long as it's not from someone who stands to profit from your investment choices. All too often "investment advisors" work on commission and will steer you to choices that maximize their income, not yours. Find someone like a fee only financial planner who you pay by the hour and takes no other source of income. Most accountants can give basic investment advice too.

Compare costs. The Vanguard funds take an annual fee of 0.22% of what you have invested to cover their costs. Many traditional mutual funds charge 1 to 2%, and those additional costs will reduce your returns on a compounding basis over time.

[Foslady]

One thing I’m tryinv to protect is that she wants to go to uni - will having money locked away affect her eligibity for loans etc? I’m not trying to get out of paying, but want to try and ensure that her grandads wish for house deposit is met

[MissConductUS]

One thing I’m tryinv to protect is that she wants to go to uni - will having money locked away affect her eligibity for loans etc?

The solicitor can draft the trust to permit educational expenses before she turns 25. I'm a Yank with one in uni and one starting in 2020, so I'm not familiar with funding rules in the UK. The worst case would be if it affect her ability to get grants/bursaries, which it might. If she has to borrow money to be paid back later with interest it might be better to pay it out of the trust. With student loans to pay back that will reduce the size of the mortgage her income will support. This is another great question for a local financial planner.

My two both have educational trusts setup by my lovely MIL, along with money we've saved in tax favored educational accounts. It has reduced their ability to get need based aid/grants as the money is presumed to be available to help pay for uni. I am hoping we can get them both through uni with no loans at all. The loans are an awful burden for a young person just starting out.

[Hortz]

UK uni loans and repayments are very different from the US.
The loan is based on the parents income. There are many threads on this on Higher Education but essentially there is a big caveat on the wisdom of using capital to find uni. In most cases it's financially better to take the loans as they are often not paid back. Rules change though and in 3 years time it could be different. You therefore need some flexibility in the trust do you can make the right decision at the time if she goes to uni.

[Sunseed]

MissConductUS Commission payments on investment products have been banned in the UK since January 2013. All advice is now fee based.

[MissConductUS]

Sunseed that's fabulous, I wish our politicians could grow a spine and do the same here. Thanks for clarifying that.

[Sunseed]

It has certainly helped drive up standards of advice!