A trustee savings account is an account where money is held in trust on behalf of a beneficiary. The beneficiary could be a child, an adult that lacks capacity to manage their own affairs or an institution, and the funds held in trust could be to pay for a child’s education, to fund a house deposit or to make grants available to a local community.
Trustees act on behalf of the beneficiary to invest and manage their money and assets. When they do this, they should act with the beneficiary’s best interests at heart. All trustees have equal status and access to the trustee savings account. These accounts have rules about how the account is managed and accessed. For example trustees could choose that any single trustee can make transactions to the trustee savings accounts, or that all trustees will need to give their permission to the bank or building society before any transactions go ahead, or that a minimum number must agree.
The beneficiary cannot access their funds while these are held in a trust.
Banks and building societies may offer specific accounts to be used in trust, while others offer their standard accounts that allow management by a trustee. Banks and building societies give trustees full access to managing trustee savings accounts.
Trustee savings accounts permit trustees to open and manage a savings account on behalf of a third party or beneficiary.
Trustees must be clear about how the trust operates and cannot do anything outside of its rules and purpose. Trustees are there to represent the beneficiary’s best interests and must conduct their decisions on behalf of the trust with the highest possible care and to the best of their abilities. Trustees are the legal owners of any funds or assets held in the trust, this allows them to manage these on behalf of the beneficiary. However, trustees cannot use this money for their own personal purposes.
All trustees need to make sure their records are accurate and keep accounts for at least six years. They must also make sure that the trust pays any tax that is required.
Parents can act as trustees for their children’s savings. If a child earns more than £100 in interest in any tax-year then any excess will be taxed at the parent’s rate of income tax.
Basic rate taxpayers can earn £1,000 in interest from savings accounts before paying tax. Find out how much you can earn before paying tax on your savings with our guide to ‘how are my savings taxed’.
The banks and building societies below all offer trustee savings accounts. You can use our savings accounts charts to find accounts from the providers below. You will need to check that the specific account you want to open accepts applications from trustees.
There are different types of trusts that all have different rules and approaches to how the trust shares income and capital held in the trust. Some more common types of trust include bare trusts, interest in possession trusts, discretionary trusts, accumulation trusts, mixed trusts, settlor-interest trusts and non-resident trusts. We have summarised the first three types of trust below:
Bare trusts are in the name of the trustee; however, the beneficiary has the right to the assets in the trust from the age of 18 in England and Wales and over 16 in Scotland. This means the funds in the trust will always go directly to the named beneficiary.
Interest in possession trusts allow for one beneficiary to receive income generated from the trust, while another beneficiary retains the ownership of these.
Discretionary trusts allow the trustees to make specific decisions about income and capital from the trust is used. The trust will have a set of rules or ‘deed’ that states the decision they can make.
You can read more about the different type of trusts on the HMRC website.
Our preferred advice broker Kellands Hale has compiled more information about how trusts work and how to use them for investments.
The trust will have set parameters for when beneficiaries can receive funds. This may be upon reaching a certain age, the funds are being used for a certain purpose or as part of being awarded a grant by the trust. Beneficiaries cannot access the funds held in trustee savings accounts and trustees cannot give permission to them to directly access these funds. Instead the trustee must either transfer the funds from the trustee savings account to an account in the name of the beneficiary or transfer the whole account into a personal account in the name of the beneficiary.
If there was only one trustee, then their personal legal representative could nominate a new trustee, become a trustee themselves or choose to have the funds released to the beneficiary. If there are joint trustees, then the surviving trustee may continue to manage the trustee savings account as before their partner trustee passed away. Those trusts with multiple trustees may choose to nominate a replacement for a trustee who has died.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.