What To Do When Your Bank Closes a Family Trust Account: Savings and ISA Options Explained

A reader asks: Now that our current provider, Nationwide, no longer supports Family Trusts, we had to move our daughter’s trust savings into an ISA, as otherwise we pay tax on those savings. Any suggestions are most welcomed.

Trust savings accounts, or trustee savings accounts, are savings accounts opened and managed by a trustee on behalf of a third party or beneficiary, in this case your daughter. Nationwide is one of many British banks phasing out its ‘trust’ accounts, unfortunately.

According to reports in the Mirror and the Guardian newspapers, trust accounts – which can be a lifeline to families of disabled children in particular – are being phased out by highstreet banks due to the cost and complexity of running them, a fairly sorry state of affairs.

A spokesperson for Nationwide said Nationwide stopped offering new trust accounts in June 2020 and closed specific types of trust accounts for existing customers between the end of 2024 and the start of 2026.

They added: “Most customers held children’s accounts (set up as bare trusts) and these weren’t affected. Only a small number of customers needed an account for a formal trust arrangement, and these were the accounts we were no longer able to provide.

“We contacted all customers to outline the changes and also provide information about alternative Nationwide products if they didn’t require an account for a formal trust arrangement. For the small number of accounts that related to formal trust arrangements, customers were given at least 90 days’ notice before closure. We contacted those customers to outline their options should they wish to maintain a trust account with another provider.”

There are a couple of smaller building societies that still do offer trust accounts, including the Mansfield Building Society and Bath Building Society. However if these don’t suit you, you are wise to consider an ISA as an alternative home for your money.

Anyone resident in the UK who is over the age of 18 can open an ISA account in order to save and invest. The big advantage is that inside an ISA the money will grow free of any tax on the gains. There are three main types of ISA accounts – cash, stocks and shares and innovative finance ISAs. (There is also the Lifetime ISA account which can only be opened by those aged between 18 and 40).

Currently the rules are that you can put up to £20,000 a year into a cash ISA, stocks and shares ISA or innovative finance ISA – or you can split that allowance across them. (The limit is lower for LISA’s at £4,000). From April 2027, for savers under 65, the amount allowed into a cash ISA will drop to £12,000.

In terms of cash ISAs, Trading 212’s Cash ISA Promo Rate holds the lead of the Saver’s Friend chart (from Moneyfacts data, correct as of 13 January) and offers an improved rate of 4.33% monthly (inclusive of a 0.73% bonus for 12 months and subject to meeting all criteria). It’s closely followed by Plum’s Plum Cash ISA which has also increased to pay 4.32% monthly (bolstered by a more substantial 1.76% 12-month bonus). Both accounts require a £1 minimum deposit and allow unlimited penalty-free withdrawals.

While Moneybox’s Moneybox Cash ISA also benefited from an increase and now offers new customers 4.30% monthly on a £500 minimum deposit (inclusive of a 0.82% 12-month bonus), savers should note its rate will plummet to 0.75% from their fourth withdrawal per year (again, correct as of 13 January).

If your preference is for a stocks and shares ISA you should check out Good Money Guide’s highest rated. Currently this is investment platform AJ Bell, which has a five out of five stars rating from Good Money Guide’s expert reviewers and benefits from comparatively low annual fees of 0% – 0.25% and dealing commission of £3.50 – £5.