Adding a trustee to a bare trust

[AGoodman]

Ah, I'm going to go out on a limb here and say I think that HMRC Guidance is wrong (and therefore ignore my last post). It doesn't appear to take any account of MLD5 which took effect on 6 October.

"How can this be?", you might say, given it was updated in October 2020. I have no idea but the rest of it clearly just describes the old rules.

Express (i.e. in writing) bare trusts will generally be registrable under the new rules except for the exclusions and I'm afraid this one would not be covered by any of them.

[AGoodman]

Ah, yes (and therefore ignore my last post). It doesn't appear to take any account of MLD5 which took effect on 6 October.

"How can this be?", you might say, given it was updated in October 2020. I have no idea but the rest of it clearly just describes the old rules.

Express (i.e. in writing) bare trusts will generally be registrable under the new rules except for the exclusions and I'm afraid this one would not be covered by any of them.

[AGoodman]

I'm so confident I wrote it twice

[sigmund]

Thank you everyone for the information that you have supplied. My problem seems to be getting more and more difficult and confusing. The original bare trust was set up by my wife and myself with a well known investment platform just after our grandson was born. Unfortunately, the investment platform is now playing the covid game and, amongst other things has suspended its bare trust services. This means that they have stopped answering correspondence. My wife has recently died and I am now the sole trustee, but I am in my 80’s and I am becoming increasingly concerned. Therefore:

1. If I should die before I can appoint another trustee, what would happen to the trust and the funds in it as my grandson would be under 18?
2. Secondly, would it suffice if I wrote a letter under the Trustee Act 1925 Sec 36 on the lines,”As the sole surviving trustee of the bare trust (name) originally set up by myself and my wife of (address) on (date) for the benefit of our grandson (name) born on (date), I hereby appoint his aunt (name) of (address) as an additional trustee to the said trust”?
3. If that is OK would it be sufficient for registering and money laundering purposes to then send a copy to HMRC and the investment platform?

I do hope you can help.

[AGoodman]

1. Your executor would have the power to appoint a new trustee or trustees of the trust. The trust itself would remain valid but your executor(s) would likely need probate and to make a deed of appointment. If you don't have a will appointing executors, a Court application might be needed (so make a will!).

2. Yes, it would likely work but it would be much (much) better to do it as a deed.

You could just add "Deed of Appointment of Trustee" to the top and "Signed as a deed" where you sign. You would also need a witness who would need to sign and add their name, address and occupation.

As you are dealing with the fund managers, it would be better still to ask a solicitors firm to prepare one properly.

3. Yes to the investment platform. You only need register with HMRC by March 2022 so no rush. I'm afraid for them you'll have to go online, register and fill out a far bit of information on you, the trust and your grandson. It's called the trust registration "service" but it doesn't work yet for this type of trust. Set a reminder to look next Summer/Autumn.

[sigmund]

Many thanks for your reply AGoodman it is much appreciated. It has provided some clarity at last.

[TW1234]

I would think that although the amendments do not specifically exclude bare trusts, the original regulations do exclude them, as the beneficiary not the trustees is the person chargeable for any taxes.(income etc) Thus the trust would not be included in the definitions of relevant trusts.

[AGoodman]

I'm not sure bare trusts were ever expressly excluded, they just weren't caught because they the trust did not incur tax liabilities (as you say).

However, express bare trusts are definitely caught by the newly revised regs.

see para 45ZA of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692) (as revised). They would be "Type A" trusts which requires only that they be "express", not registered elsewhere in the EEA and not exempt.

The question of whether a trust has a UK tax liability is now only really relevant to offshore trusts as all express UK trusts (which aren't expressly exempt) have to register irrespective of tax liabilities.