TRSM23160 - Types of trust that need to be registered: contents: excluded express trusts: contents: bank accounts for minors

Where individuals (often parents or guardians) open bank or building society accounts for the benefit of a minor child, this typically creates a bare trust with the individual holding the bank account on trust for the benefit of the minor child.

This may also be the case for bank accounts opened for persons who lack mental capacity.

Though there is no general exclusion from registration for bare trusts, trusts created as a requirement of opening a bank account for a person under the age of 18 or a person lacking mental capacity are excluded from registration as express trusts (Sch3A(6A) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017).

Not all types of child savings accounts involve trusts: for example Child Trust Funds and Junior ISAs are not trusts and therefore are not required to register on TRS (see TRSM10030).

Example

Dominic opens a child savings account with the Anytown Building Society in the name of his infant daughter Mia. Dominic intends to pay funds into the account by regular standing order for Mia’s benefit as she grows older.

Though Dominic is technically holding the bank account on bare trust for Mia’s benefit until Mia is old enough to take full ownership of the account, this trust does not need to be registered on TRS.

 

Accounts held with other financial institutions

This exclusion applies to accounts opened by any organisation or person authorised under the Financial Services and Markets Act 2000 to carry on by way of business the activity of accepting cash deposits. Such organisations generally include UK banks, building societies and credit unions.

This exclusion ensures that individuals who open deposit accounts on behalf of minor children or other vulnerable persons are not inadvertently caught by the requirement to register on TRS by virtue of the fact that the holding of the account technically creates a bare trust arrangement.

The majority of such accounts will be opened with retail banks or building societies, but other institutions (for example the National Savings and Investment Bank) may offer cash deposit accounts for children. This exclusion should be interpreted so as to exclude from registration any such account opened for the benefit of a child.

 

Trusts holding investments for minors

The exclusion from registration at Sch3A(6A) only extends to trusts created when opening cash deposit accounts. Trusts holding investments (for example stocks and shares) for the benefit of a minor child will not qualify for this exclusion.

Premium bonds

Although the exclusion from registration at Sch3A(6A) does not extend to investments such as premium bonds, premium bonds are not registrable on TRS because a premium bond purchased in the name of a minor does not create an express trust. Premium bonds cannot be held jointly or in trust.

National Savings Certificates

A National Savings Certificate (NSC) purchased in the name of a minor does not itself create an express trust. However, an NSC may be purchased by trustees and held on trust for a minor child. If so, this would be an express trust which would be registrable on TRS unless any other exclusion from registration applies. The exclusion at Sch3A(6A) does not apply, because the creation of the trust is not a requirement of purchasing the NSC.