becks_r

Hi Everyone

Not sure if this is the best place to ask this question, it's sort of a UK and USA question. It's a bit of a long question....

So my Mum set up a discretionary trust in her will for one of the beneficiaries. She named me and a trusted friend of hers as the trustees. Her will was written ages ago, so I had sort of forgotten about it until she died a few years ago. It has taken ages for the estate to be sorted, but the executor has now got probate, so the monies should be winging their way to everyone very soon. We now have to do something about this trust.

Obviously, my Mum did this when I was still living in UK and neither of us ever thought I would be moving abroad. But my Mum got advice when she set up her will and was told that the trustees just have to set up a bank account for the money to go into and then follow the instructions in the trust document Mum signed. I tried talking to the same financial advisor that Mum spoke to and he seemed to still think this is the case, but I always thought he was a bit dodgy!! Also, he said that the other trustee could set up an account in their name only, because of me being in USA, but there would have to be clear documentation that I gave my permission for everything they did, so there was an audit trail.

Does anyone have experience of this? I have done some google searching and there is lots of information about the trustee role and tax implications. But the only information I could find about where to put the money seemed to bring up companies that you pay money to for the privilege of having the money, or something about trust bonds!

Obviously the account will be in the UK as the beneficiary lives there. I will be back in UK soon, so can get everything sorted then. I just want to be prepared as to what I have to do before I go back.

Any help gratefully received - as always

Thanks loads

Becks

Pulaski

Does the trust need to exist? I was involved in one briefly, and it was an almighty cluster. If the trustees agree and the bene is a mentally competent adult there is nothing to stop you handing the trust assets to the beneficiary and dissolving the trust.

The fact that trusts aren't much help, and certainly there's no tax benefit, for adults as a result of changes introduced by the Trustee Act of 1925 is why trusts are relatively rare in the UK.

becks_r

Unfortunately, the beneficiary wants it set up. Not for any tax reasons, but he believes it is the best thing for him for at least the next year or so

MidAtlantic

I'm not sure the beneficiary has a say (but I may be wrong!). The trustees are the one's who control it.

I would ask a UK lawyer what your options are when you are over there. Maybe you can just resign as a trustee.

Pulaski

It depends exactly what the trust says, but typically the trustees of a discretionary trust can distribute the assets in accordance with the objectives of the trust, and then dissolve the trust at pretty much any time.

becks_r

But if we decide to set it up, is it as simple as the guy advising my Mum said and it's just a case of opening a bank account and putting the money in it?

Pulaski

Kind of ..... but then you, as trustee open yourself up to FBAR and FATCA reporting, which can make an ugly mess of your tax returns, as you then have your name on an account for which hou aren't going to want to pay taxes on any income.

becks_r

Oh - what a pain!! I certainly don't want to pay taxes on money that isn't mine and is never going to come to me. Maybe I can get the other trustee to set it up in her name and just ask my permission to move money when it is needed

celticgrid

I was joint trustee for my late grandmother's estate while in the UK. When I knew I was moving to the US I looked into it and followed the advice I was given...resign as trustee. Just so much grief in terms of paperwork and reporting and...

No-one involved wanted the US dimension brought into the mix, so there was no hassle with resigning and getting another person appointed into the role.

becks_r

I am certainly happy to resign if that is the best thing to do. I will arrange some legal and financial advice for when I get back to UK and work out next steps.

Thanks everyone for your help

Gordon Barlow

Becks... You said in your OP that it's a discretionary trust. To me, that indicates that there is more than one eligible beneficiary - and that the trustees (who must act jointly, by the way) have the authority to decide in their discretion which of the beneficiaries get the distributions. The other commenters here are correct in their comments, and you would probably be wise to resign as trustee, after taking formal legal advice; but please tell us what you yourself understand by the term "discretionary trust".

becks_r

My understanding is that yes there are 2 trustees, but there is only one beneficiary to the trust. The estate is being divided equally between the other beneficiaries and the trust. And, yes, the trustees have to decide jointly and have the discretion to decide. But the reality is that neither of the trustees would go against the wishes of my Mum.