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bequeathing cash to a minor
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bequeathing cash to a minor
I understand that trusts would have to set up when the will is executed. Were I to "depart" with several minor beneficiaries in my will with say, £10k each what would be ball park costs for :-
1. setting up each trust
2. ongoing charges for say, 10 years
Assuming the solicitor who wrote the will " looks after everything"
My solicitor was reluctant to give me solid answers.
I live in the southeast where everything costs a bomb!
1. setting up each trust
2. ongoing charges for say, 10 years
Assuming the solicitor who wrote the will " looks after everything"
My solicitor was reluctant to give me solid answers.
I live in the southeast where everything costs a bomb!
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- Lemon Half
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Re: bequeathing cash to a minor
In my example trusts are mandatory. Can only be avoided by eliminating minors from will.
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- Lemon Quarter
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Re: bequeathing cash to a minor
You only need Bare Trusts where an adult holds the asset (cash or shares) on behalf of the minor until they reach 18. That does not need a solicitor or any formal documentation. The child continues to be the beneficial owner and get personal allowances (income and cgt).
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Re: bequeathing cash to a minor
dubre wrote:I understand that trusts would have to set up when the will is executed. Were I to "depart" with several minor beneficiaries in my will with say, £10k each what would be ball park costs for :-
1. setting up each trust
2. ongoing charges for say, 10 years
Assuming the solicitor who wrote the will " looks after everything"
My solicitor was reluctant to give me solid answers.
I live in the southeast where everything costs a bomb!
It really wouldn't be sensible to have solicitors managing trusts involving sums of this size. They would charge by the hour, and even if the work was delegated to a junior employee they would probably be charging at least £180 p.h. including VAT. Unfortunately, though, many firms in this situation will charge at a partner's rate, probably at least £300 - £400 p.h. inc VAT.
It would be easy to justify a minimum of 2 -3 hours work a year, so in 10 years it's possible the trust could be entirely exhausted.
It's far more sensible to give the legacy to the child but to include a provision in the Will whereby the money can be paid to the child's parent. This is the normal situation for modest legacies, and in my 40 years' experience it works perfectly well.
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Re: bequeathing cash to a minor
ok---and I am trying to be discrete
The will states that the solicitor is the executor and trustee and for various reasons this will may be difficult to change. A small section of the will leaves £10k to each of two grandchildren currently aged 5. If I kick my clogs tomorrow how should a responsible solicitor handle this small section of the will and what would it cost. the money to be paid at age 25.
The will states that the solicitor is the executor and trustee and for various reasons this will may be difficult to change. A small section of the will leaves £10k to each of two grandchildren currently aged 5. If I kick my clogs tomorrow how should a responsible solicitor handle this small section of the will and what would it cost. the money to be paid at age 25.
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Re: bequeathing cash to a minor
dubre wrote:ok---and I am trying to be discrete
The will states that the solicitor is the executor and trustee and for various reasons this will may be difficult to change. A small section of the will leaves £10k to each of two grandchildren currently aged 5. If I kick my clogs tomorrow how should a responsible solicitor handle this small section of the will and what would it cost. the money to be paid at age 25.
One way round this might be for the money to be put into Junior ISAs for the minors. You then automatically have a trust arrangement where there is no admin and the child can't get at it until aged 18 (ok not 25).
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Re: bequeathing cash to a minor
dubre wrote:The will states that the solicitor is the executor and trustee and for various reasons this will may be difficult to change. A small section of the will leaves £10k to each of two grandchildren currently aged 5. If I kick my clogs tomorrow how should a responsible solicitor handle this small section of the will and what would it cost. the money to be paid at age 25.
Solicitors, more so than probably any other professionals apart from doctors, live in mortal terror of being sued. Consequently, just as doctors practise defensive medicine - carrying out lots of unnecessary tests and procedures just to cover their backsides - so solicitors make sure that everything is done with one eye on a claim being made.
This will mean, for example, that the solicitor will feel legally obliged to seek paid for investment advice, even with such small sums as this, and these costs will be taken out of the trust fund. The advice will have to be reviewed on a regular basis.
As I said earlier, there is other admin work as well, and the charges will be disproportionate to the value of the trust.
The ultimate beneficiary will not thank you for having ensured that a large chunk of their legacy has gone to the solicitor by the time they finally receive it.
On the assumption you don't want to adopt my earlier suggestion - which works perfectly well 99% of the time - you don't have to change the Will itself. Unless there's a compelling reason to appoint the solicitor as the executor just make a simple codicil cancelling their appointment and appointing a lay person (or two) as the executor(s) so that the trust can be administered at little or no cost. You don't even have to tell the solicitor if you're scared of upsetting them.
However, if you still insist on the solicitor being appointed then you'll just have to try and agree a cap on their charges, though the suggestion is unlikely to be received with enthusiasm.
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Re: bequeathing cash to a minor
Clitheroekid wrote:However, if you still insist on the solicitor being appointed then you'll just have to try and agree a cap on their charges, though the suggestion is unlikely to be received with enthusiasm.
If they insist on using the solicitors, wouldn't it be easier just to make them beneficiaries of the leagacies and cut out all the faffing?
The end result would be the same, except the taxman would get less of it.
Paul
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Re: bequeathing cash to a minor
Just to note on this - it has now become clear that bare trusts do need to be registered with the Trust Registration Service, even though the trust does not pay tax as the assets are beneficially owned by a minor. The deadline for registration is 1st Sept.
The website for this is as clear as mud with everything being expressed in legal terms which the layman may not understand.
So, for example, a minor is given shares by a grandparent, which have to be registered in the name of an adult (whether certificated or with a broker) but designated with the child's initials (eg A N Grandpa a/c ABC). Even though there is no trust deed or document but the adult is simply a nominee for the child, this is a Bare Trust and is, apparently, an 'Express Trust' according to the lingo used by the HMRC website and has to be registered on their system.
Just to complicate matters further, grandpa needs to register as an organisation (!!) first with HMRC, even though he will already be registered for submitting tax returns as an individual, and then register the bare trust on the TRS system.
I have just done this for one grandchild and it is hard to imagine how they could have complicated the process more if they had been trying to.
The website for this is as clear as mud with everything being expressed in legal terms which the layman may not understand.
So, for example, a minor is given shares by a grandparent, which have to be registered in the name of an adult (whether certificated or with a broker) but designated with the child's initials (eg A N Grandpa a/c ABC). Even though there is no trust deed or document but the adult is simply a nominee for the child, this is a Bare Trust and is, apparently, an 'Express Trust' according to the lingo used by the HMRC website and has to be registered on their system.
Just to complicate matters further, grandpa needs to register as an organisation (!!) first with HMRC, even though he will already be registered for submitting tax returns as an individual, and then register the bare trust on the TRS system.
I have just done this for one grandchild and it is hard to imagine how they could have complicated the process more if they had been trying to.
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