UKC

Hello UKC

I'm hoping you will live up to your reputation of providing good advice on random non-climbing topics.

My mother passed away at the start of the year and left her house £225k and some shares £200k to a discretionary trust. I'm a trustee.

Her intention is that my disabled brother can  continue to live in the house and the trust will fund his care costs.

Tax and accounting for trusts seem to be complex and costly, and it seems hard to find an Accountant with trust experience who is interested in such a small trust.

Two questions for you.

Could you recommend a good accountant for a small trust? (I'm in Southampton)

Do you have any experience running small trusts or any advice you can share with me?

Thanks

James

Who set the scheme up? Why can they not continue with that advice?If it was a solicitor ask them for as recommendation.

Good accountants are expensive.So I guess that when accountants look at it they will say can you afford the fees.

The Solicitor who set it up cant continue because  the Pandemic has impacted their ability to do business...,  and they were massively struggling before it took them 197 days to even submit the grant of probate from being given all the completed forms !!  so they have resigned from further work.

It's not the cost of the Accountant that I'm bothered about its just finding someone with experience who is willing to work on a small trust.

Try David Own & Co in Devizes 

Be aware at the moment that most accountants are swamped with end of year tax returns.

Edit - advice - fees will eat the trust (after set up) so pay attention to what you are being charged by the investment company etc.

I was the sole trustee of a discretionary trust for some six years. I can’t offer much for an English Trust as the trust I dealt with was under Scottish Law.

For various reasons I didn’t go back to the original solicitor who set it up, so I found a small firm solicitor who only charged for advice as and when needed. They didn’t need (or want) to act for the trust (which is what the original solicitor did) or act for me on my behalf, so costs were actually very low. The trust, fortunately, was worded to allow me to operate the trust myself.
 

Likewise, I chose a small firm of accountants who, again, only dealt with matters as needed. I was exceptionally lucky my accountant was very experienced (as well as his day job was a p/t uni lecturer on accountancy and author of specialist accountancy publications). He was sympathetic to lay trustees dealing with matters as he felt no small trust in this experience ever made enough money to cover full professional costs of running.
 

I handled all general matters myself, but with advice as needed with the exception that there was an IFA involved as the original solicitor had insisted on the IFA at the time he was a trustee. The IFA fees were in some years, themselves, as much as the Trust made, but it was not going to be cheap or easy to shift away so I left it.

Bearing in mind I’m in Scotland in case it’s different, I didn’t find it that hard to deal with overall. Good detailed record (I did it on a timeline entry basis), filing receipts, etc., and good note taking of phone calls etc were imperative (ultimately as the Trustee could be liable for investigation or worse) but no more than good practice entails. I also found the HMRC trusts helpline very helpful when I needed that so suggest you use that if needed.

If your happy to deal with a lot yourself, based on my experience I would suggest trying to find  small firms for both solicitor and accountant who are just content with providing advice rather than essentially taking over. It was certainly quicker and easier to just deal with matters myself than having to arrange meetings with multiple professionals and await decisions and responses. The costs also would certainly run much higher and more than any trust could expect to make with current interest rates.

Deciding and removing monies from the trust for the trust’s purpose was straight forward. If the paperwork was correctly set up at the start it should not be a problem. Make sure you have the original legal paperwork giving you the authority. Closing the trust myself with advice also was simple though took time and all record stored. HMRC advised at the time to keep records for a year after the end of the final accounting year, but I’ve already keep them longer than that just in case.

HTH a little.

Amazing that's really helpful   Thankyou  

I have been in a similar situation recently. Can't help with a local to Southampton accountant but I used one in Essex. Expensive but good, and practical enough to let me do the donkey work and only charge me for the stuff they did. This was involving my father's estate and tidying up a (legacy, in more than one way) from my mother which should have been put into a discretionary trust by my father. None of it was actually complicated but the form filling was absolutely horrendous, and complicated by them having old wills that used a discretionary trust in a way that was necessary in 2008 to allow spouses to share the tax-free allowance, that is superfluous and massively over-complicated these days.

one thing to think about - you may want some advice as to whether leaving everything to a discretionary trust was the best (least tax) outcome. My recollection is that the "tax free" amount is about £325,000 but if you leave your house to a descendent you get another (175,000?) tax free amount - that you could not claim if the house was left to a trust.

Obviously there could be a lot more unsaid to your situation like her having a surviving spouse, or other beneficiaries - but if you did ended up paying inheritance tax it could potentially be negated by varying the will to leave the house directly to you or your brother , which could be a worthwhile thing to do. I believe varying a will is fairly easy as long as all of the beneficiaries agree - however if the trust is a beneficiary that may throw up some extra complication...

Good luck, it's a lot of work at a difficult time

Plenty of good advice in the other replies on the thread.

These days, it's worth thinking very carefully about whether to continue a trust due to the costs (accounting and legal) and the ever increasing tax hits and whether there's a net benefit.  Except in special circumstances like where you have a disabled person (brother).