Trust or bank account for child's inheritance

[AJ1]

Hi there,

A friend is the executor of an uncles will. The uncle died last year and life insurance for his daughter has come through to the solicitor. The child's mother and the deceased were never married and not together when he died. My friend needs to set up an account for the child's inheritance along with the other executor of the will. The solicitor is advising him that a bank account in the executors names will suffice rather than a trust. Both executors are self employed. Would there be any tax implications for them if the account was in their name. I assume the child's name will need to be on the account too.

 

[TomEdison]

How old is the child?

 

[AJ1]

11

 

[TomEdison]

OK, you need an arrangement that will last for 7 years until the child is old enough to claim the money.

If the executors are willing to look after the money for the 7 years, they can set up an account for the purpose in their joint names, documenting (e.g. in a letter or note) that it used solely for the purpose of holding the child's bequest until the child is old enough to claim it. This will not affecgt the personal tax affairs of either executor.

However if the the sum is large a question arises as to whether simply putting the money in the bank for seven years is the best way of handling the matter, in the child's best interest. The executors should ask the solicitor what courses of action are open to them under the will, and then ask themselves — and if they think it desirable, ask an accountant or investment adviser — which course of action they should follow.