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Where Taxpayers and Advisers Meet

bare trust- holding unit trusts for children

uncle john
Posts: 10
Joined: Mon Nov 21, 2016 12:15 pm

bare trust- holding unit trusts for children

Postby uncle john » Wed Feb 12, 2020 2:07 pm

Hello

I'd like to buy for a young child some unit trusts; because it'll be 15 years or so before he's 18, and costs do compound over such a period, I'm looking for a low-cost 'platform' on which to hold them.

In one or two platforms, one can hold units in an adult's name, with the child's initials added, to signify that the units don't belong to the adult but are held under a bare trust. (Alternatively, the units could be held in a JISA, but in this case, I don't want to use a JISA.) However, those particular platforms are relatively expensive, charging 0.5% pa of the value. I know that the largest platform doesn't charge platform fees for shares, only for unit trusts, but i specifically want to hold unit trusts.

There are much cheaper platforms out there with charges down to around 0.2%, but so far as I can see, they seem to only accept adults and one can't designate the units via the child's initials to denote a bare trust.

My question - in practice, were one to open an account in one's own name at such a lower-cost firm, without any designation, would HMRC accept that the units weren't beneficially owned by the adult - but rather by the child - if for example, one could demonstrate that the funds to buy them had come from the child's own bank account, and not from the adult? Or is there some other way?

Alternatively, does anyone know of any low-cost platform that does accept bare trusts?

Any advice or suggestions would be much appreciated.

thanks.

maths
Posts: 7947
Joined: Wed Aug 06, 2008 3:25 pm

Re: bare trust- holding unit trusts for children

Postby maths » Wed Feb 12, 2020 5:33 pm

You could purchase the units in your own name. You could then simply execute a simple declaration of trust in favour of the children.

You plus wife could be trustees; two trustees advisable.

uncle john
Posts: 10
Joined: Mon Nov 21, 2016 12:15 pm

Re: bare trust- holding unit trusts for children

Postby uncle john » Wed Feb 12, 2020 9:49 pm

Many thanks for the swift reply.
OK - so no need for the account to be designated as the child's, then.
Point noted re number of trustees.
Would standard bare trust wording be fine, and presumably it would help to make clear that the units belonged to the child were I to specifically name the investments in the wording?
I assume that it isn't necessary to file the bare trust deed anywhere, but just to keep it safe in case the beneficial ownership is ever queried?

maths
Posts: 7947
Joined: Wed Aug 06, 2008 3:25 pm

Re: bare trust- holding unit trusts for children

Postby maths » Thu Feb 13, 2020 6:36 pm

OK - so no need for the account to be designated as the child's, then. CORRECT


Would standard bare trust wording be fine, and presumably it would help to make clear that the units belonged to the child were I to specifically name the investments in the wording?
STANDARD BARE TRUST FINE. WOULD IDENTIFY THE "TRUST FUND" IE THE DETAILS OF THE PROPERTY SETTLED.BENEFICIARIES WOULD BE DETAILED IN THE DEED.

I assume that it isn't necessary to file the bare trust deed anywhere, but just to keep it safe in case the beneficial ownership is ever queried? CORRECT

AdamS93
Posts: 260
Joined: Tue Sep 26, 2017 6:28 pm

Re: bare trust- holding unit trusts for children

Postby AdamS93 » Thu Feb 13, 2020 7:06 pm

What are you trying to achieve?

The income from the unit trusts will still need to go on your tax return due to the settlements legislation.

maths
Posts: 7947
Joined: Wed Aug 06, 2008 3:25 pm

Re: bare trust- holding unit trusts for children

Postby maths » Thu Feb 13, 2020 8:42 pm

I had assumed from the post wording “ I would like to buy for a young child” that the poster wasn’t referring to his own children.

Poster??

uncle john
Posts: 10
Joined: Mon Nov 21, 2016 12:15 pm

Re: bare trust- holding unit trusts for children

Postby uncle john » Fri Feb 14, 2020 10:34 am

The investments would be for my grandson.

AdamS93
Posts: 260
Joined: Tue Sep 26, 2017 6:28 pm

Re: bare trust- holding unit trusts for children

Postby AdamS93 » Fri Feb 14, 2020 12:49 pm

In that case, ignore me :roll:

uncle john
Posts: 10
Joined: Mon Nov 21, 2016 12:15 pm

Re: bare trust- holding unit trusts for children

Postby uncle john » Sat Feb 15, 2020 12:15 pm

As on one or two previous occasions, I'm impressed by the depth of knowledge of the comments which I've received, and which I very much appreciate.
Thanks again.


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