Bare Trust for child savings account?

[Dave Vanian]

I'm aware that several life insurance companies offer a draft Bare Trust form that you can use to set up a trust for your kids with one of their unit-linked savings plans, to avail of the €3,000 annual Gift/Inheritance Tax exemption. Such trust forms come with the caveat that the life insurance company is only providing them as a convenience and you should take tax and legal advice before using them. But if the requirement is fairly straightforward, then the off-the-shelf Bare Trust forms are usually sufficient.

Does anyone know if any of the banks or credit unions have similar draft Bare Trust forms that can be used to set up a similar trust where you don't want to use a unit-linked savings plan for this purpose?

 

[Greenleaf]

Not what you looking for, but I took out two bare trusts policies with New Ireland through Moneycube.

 

[Dave Vanian]

Not what you looking for, but I took out two bare trusts policies with New Ireland through Moneycube.

Thanks. Yes the life insurance companies are well set up for this. But if a person doesn't want a savings or investment plan with New Ireland or other life insurance company and just wants to leave the money in a deposit savings account, do any of the banks or credit unions have bare trust draft forms?

 

[GSheehy]

I've not come across them for banks/credit institutions.

For an account to be compliant, the following applies.

"Section 5 of the Capital Acquisitions Tax Consolidation Act 2003 (CATCA 2003) sets out that a person becomes chargeable to CAT on a gift when a person becomes “beneficially entitled in possession, otherwise than on a death, to any benefit (whether or not the person becoming so entitled already has any interest in the property in which such person takes such benefit), otherwise than for full consideration in money or money’s worth paid by such person.

Therefore, to become chargeable to CAT the following criteria must exist:

1. ⁠There must be a beneficial entitlement
2. ⁠It must be in possession

The key point is that under the assignment model of the Child Savings Plan, the child is beneficially entitled to and is in possession of the investment from outset, fulfilling the two criteria above. As the contributions are €3,000 or less under the Small Gifts Exemption, no gift tax arises on encashment. Please note Exit Tax is still payable."

Up to the individual setting up the account to ensure that it's compliant with the above (which is taken from a technical document that ZL have. ) They (legal dept. I'd say) choose to do it this way (by assignment) as opposed to Trust. But, no matter which way you choose to set one up you're advised to seek legal/taxation advice.


Gerard

www.saveandinvest.ie