Why are banks forgetting trust funds?

Why are banks forgetting trust funds?

I have been thinking about trusts recently as I am frequently being asked to provide deposit facilities for them, as clients are finding this increasingly frustrating to achieve elsewhere. While HMRC figures show that fewer clients are using trusts (158,500 trusts and estates making self-assessment returns for the tax year 2015-16, which is 61,500 fewer than 2004-05) they are still crucially important for many.

I spoke with a professional contact of mine, Wendy Hall, a solicitor in the Private Client Department at Edwin Coe LLP about this, and she states “The majority of our high net worth clients use trusts as a way of passing wealth down the generations, whilst also retaining control and reducing the value of their (and their heirs) estates subject to inheritance tax.”

Remembering the advantages

While trusts are often thought of as ‘high tax’ (and increasingly, compliance-heavy), they still play a valuable role for many high net worth clients.

Wendy noted that “By choosing appropriate investments and using as many of the available exemptions, allowances and tax-free (or lower rate) bands as possible, the overall tax position for trusts can in fact be very low.

I asked Wendy why she believed fewer banks were offering deposit opportunities for trusts. She said that, in her experience, many are simply not equipped to offer advice on setting up trusts, and this makes them wary of operating accounts for this purpose. “Whilst some are comfortable with the notion of a bare trust or nominee account (most commonly used by parents opening accounts on behalf of children), they are less well-acquainted with discretionary or life interest trusts, and the accompanying tax and legal considerations.”

At Hampden & Co. we understand trust funds. At this moment we’re managing a Personal Injury Trust for a client with very specific borrowing requirements to make home improvements that will have a significant impact on their lifestyle. While many banks are backing away from them entirely, we’re doing the exact opposite. We’ve made it a particular strength of ours. Trust funds might only be required in exceptional circumstances, but we take pride in our ability to make delivering exceptional services routine for our clients.

If you would like to hear more about this, and if you or your clients might have need of deposit facilities for trusts, please do get in touch with me at Stephen.Buckland@hampdenandco.com