Setting up trusts for children following an inheritance

[MyGranWasAManageress]

My mum died recently, she had a will and left everything to my 4 children to go into trust until they are 21. We're at the very beginning of the process and I'm aware it will be some time until the estate is settled. Not sure if it's relevant but my mum lived in Scotland so the Scottish legal system applies. We're in England.

My DC are aged between 3-13. The total estate is probably going to be around £120-140k depending on what her property sells for and legal fees etc accrued along the way. My mum really didn't want me to engage a solicitor for sorting the trusts as a friend of hers lost a lot in fees they charged.

To get to the point(!) I'm struggling to find information on how I will set up the trusts. Do I just approach banks/building societies? Will I need to have them set up so the money goes directly into them when the estate is settled?

Can I just suggest using a financial adviser? I know of one large provider of investments who will only accept applications from advisers.
Iirc if you want to apply in the name of a trust that's fine but it would have to be drawn up by a solicitor or done by the same company you are applying to invest with as part of the application.

I have to say that I agree with Joe66. The trust exists. Nothing legal needs to be done. OP simply needs some financial advice (if the trust fund is large enough). The IFA can advise on tax implications and the type of investment vehicles taking in to account the different news of the different children (eg the younger one can invest in longer term investments, whereas the 13 year old might need to access some of their cash sooner).

If it all simply goes in to a bog standard bank account you protect it by calling the account, say, "Little Timmy Trust Account"

I think you will need legal advice - the will trust being created in Scotland but the beneficiaries are in England; These are different legal systems so there may be differing legal treatments, and even different taxes.
You also need legal advice about the Will trust - normally bare trusts are until children are 18. ie. It is perfectly legal to manage the affairs of your children, such as money in bank accounts for their benefit, but once they are 18 and deemed an adult then you would lose the automatic right to manage their affairs. If the money is already in trust then you can continue managing the trust/s after they are 18. You may not necessarily need an expensive trust document as the will may be certain enough, but you will need to read up on trusts and get advice re taxes and jurisdictions. Actually I would like to know the specialist lawyer's advice. I am not sure in this case putting it in a named bank account without knowing what else you have to do is enough.

I thought I'd update a little.

I spoke to a local firm who deal with trusts and are part of STEP. The advice I was given was that the will creates the trust. If I were to put it in a trust which restricted access until 21, because they would need to be individual trusts for each child and the relatively small amount involved, the costs of the trust (they have to be registered and there are other fees) would pretty much wipe out the inheritance by the time they get to 21.

This was something my mum specifically did not want to happen, as it happened to a friend's DD who was a minor that inherited but basically ended up with nothing.

His advice was to set up individual bank accounts. They would technically be allowed to access them at 18 but it's either that or have practically nothing at 21.

I think that’s incorrect about the finance! I think you could ask a financial adviser to invest this money as a whole in the joint names of the children. You act for the children as they are minors. We have invested lump sums for our children and have had a great return. We decided 25 was when they could spend the money not 21. The money is theirs and it has made way more than a bank account! That’s awful advice. We are private banking clients and you should be able to make £120,000 plus work hard enough to make money if it’s invested properly. Don’t do the separate trusts. Invest the single sum you end up with and agree how and when they can access their part of it. Not having a specific end date helps you maximise growth and deciding when to take money out of the investment.

TBH It was a long conversation so I may be misquoting saying it would have to be individual trusts, but I would not want to have it in a joint trust. My DC are 13,11,5 &4. The idea of managing a joint trust with their different ages, plus taxes, the trust fees, plus the annual tax returns and who knows what else, is not something I comfortable with at all. And nor was that my mum's intention.

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