Trusts are no longer niche structures only used by the ultra-wealthy. They play an increasingly important role in financial planning for a wide range of reasons – from succession planning, charitable giving and long-term family asset management to medical negligence settlements and personal injury awards.

While the legal and tax framework around trusts is well established, the practicalities of day-to-day banking for trusts are often overlooked. Trustees regularly tell us that finding a bank willing and able to support them is harder than it should be.

This is where a private bank with specialist expertise can make a meaningful difference.

What is a trust and why are they used?

At its simplest, a trust is a legal arrangement typically set out in a trust deed, under which assets are transferred by a ‘Settlor’ into the control of one or more ‘trustees’. The trustees hold and manage those assets in accordance with the trust deed for the benefit of one or more ‘beneficiaries’.

Trusts can hold a wide range of different assets, including:

• Cash
• Property
• Shares and investments
• Land and other business or personal assets

They are commonly used:

• To protect family assets and define how and when they can be used
• To manage funds for children or vulnerable individuals
• To provide for someone who has lost capacity
• To pass on assets either before or after death
• For charitable or philanthropic purposes

The responsibility of being a trustee

Trustees carry significant legal responsibility. They are the legal owners of the trust assets and must act according to the trust deed and always in the best interests of the beneficiaries.

In practice, this means:

• Managing the trust assets carefully
• Making payments and distributions, as required
• Collecting income
• Paying any tax due
• Keeping accurate records
• Making informed decisions about how funds are used

Trustees can be changed, but there must always be at least one trustee. Given the level of responsibility involved, trustees generally rely on professional support from solicitors and accountants, and they need bankers who understand a trust’s complexities.

Why trust banking has become more challenging

Trustees and their professional advisers are finding it increasingly difficult to find appropriate banking services for trusts. Retail banks often view trusts as complex with too much administration required, particularly at the onboarding stage when documentation and due diligence have to be carefully reviewed.

Where trust banking is offered by high-street banks, it is often expensive, impersonal and lacking in the expertise required. This has created a clear need for specialist trust banking by bankers who understand the legal, operational and regulatory nuances involved.

The role of private banks in trust banking

A private bank is used to dealing with complex financial arrangements and developing long-term and trusted relationships with clients.

Here at Hampden Bank, banking for trusts is a core service we offer, rather than an occasional exception. Our focus is on enabling trustees to operate efficiently and securely. We understand trusts and are used to facilitating transactions, safeguarding assets, providing competitive rates on deposits and ensuring the smooth operation of day-to-day banking for our trustee clients.

What banking services does a trust need?

A trust’s banking requirements can, of course, evolve over time but typically include:

• Dedicated trust accounts
• Secure money transfers and payments
• Holding and managing large cash balances
• Supporting property transactions
• Managing loan facilities
• Facilitating distributions to beneficiaries
• Ensuring compliance with regulatory requirements

At Hampden Bank, trustees work with a banker who understands the trust’s structure, purpose and operations. This continuity matters to our clients.

Getting the foundations right: onboarding a trust

The onboarding process is often where frustrations arise, as it is complex and critical. It tends to involve:

• Reviewing the trust deed in detail
• Verifying trustees and beneficiaries
• Confirming registration or exemption with HMRC’s Trust Registration Service (TRS)
• Confirming the purpose and expected activity of the trust

We understand the importance of accuracy and efficiency. We are comfortable with digital tools like Docusign and can easily arrange online meetings to allow trustees and advisers to complete documentation and meet with their banker wherever they are based, without any unnecessary delays.

Security and fraud prevention

Trusts often make high-value transactions. A key advantage to trustees of working with a banker who understands the trust and its usual patterns of activity is the enhanced security this offers.

Combined with robust internal controls and verification processes, this familiarity forms a strong defence against fraud. Payments and transfers are handled carefully, with appropriate checks at every stage. Knowing the client is not just good service but an essential part of safeguarding trust assets.

Lending and liquidity for trusts

In some cases, trusts require borrowing, perhaps to support a property purchase, to manage liquidity or to bridge transactions. Where appropriate and subject to the terms of the trust deed, a credit assessment and approval, we can consider lending facilities, which may be secured against trust assets.

With our experience of trust structures, we understand how to create lending arrangements that align with the legal framework of the trust and support the Trustees in attaining their objectives.

Supporting charitable and personal injury trusts

Charitable trusts and Charitable Incorporated Organisations require similar clarity and reliability from a bank, alongside a strong understanding of regulatory expectations.

Personal injury trusts, in particular, demand sensitivity. These arrangements are often long term, designed to safeguard funds intended to provide care and stability for someone who has experienced life-changing circumstances.

In such cases, the banker typically forms part of a wider network of professional support including solicitors, deputies, family members and advisers. Stability and continuity are essential elements.

As a bank experienced in trusts, we understand the regulatory framework charities operate within and can support trustees in meeting their obligations while ensuring that funds can be quickly and efficiently accessed.

Who can benefit from our expertise around trusts?

Trusts are increasingly relevant for:

• Business owners planning succession
• Families structuring wealth transfer
• Professionals after a business sale
• Landowners and entrepreneurs
• Individuals or families managing compensation awards

When taking on a trust as a client, we typically look for a minimum cash deposit of £250,000.

In return, trusts banking with us benefit from the personal service of their banker as well as competitive interest rates.

Case study: Supporting a discretionary trust

Recently, a discretionary trust was established following the sale of an estate. The Settlor wished to hold the proceeds, several million pounds, in trust for their children until they reached a certain age.

As the trust’s bank, we had four tasks:

• Set up a dedicated trust bank account
• Provide a tailored deposit solution to maximise interest for the substantial proportion of the balance to be kept in cash
• Facilitate future payments to beneficiaries
• Support the trustees with the ongoing administration of the trust

Here, our role was straightforward but essential. The trustees’ feedback was consistent with what we often hear – they valued the Bank’s ability to manage a complex arrangement efficiently, with clarity and full understanding of the trust’s structure, as well as the competitive rates.

Looking ahead

We believe trusts are likely to become an increasingly common feature of the financial landscape. They can provide control, protection and flexibility, but they also require careful administration.

Trustees carry responsibility. Having a banking partner that understands both the technical structure and the human context of a trust can make that responsibility significantly easier to manage.

With our personalised service, competitive fees and deep expertise in trust banking, we believe we are well placed to support trustees now and in the years ahead.

Matt Nimbley is a Banking Director based in Edinburgh.

Differences exist between English and Scottish Trust laws and you should seek advice from a qualified lawyer. Hampden Bank can only provide banking services in line with the permissions granted to the Trustees in line with the Trust deed and does not provide advice in relation to the Trust itself.

Additional info from The Law Society: https://www.lawsociety.org.uk/public/for-public-visitors/common-legal-issues/trusts

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