CGT - When is Residue Ascertained in Estate?


(Geraldine) #1

An estate has been left into a discretionary trust. Within 2 years of death a life interest was appointed to the surviving spouse in order to claim spouse exemption. Nothing has been vested in the Trustees.

Various property and business interests now need to be dealt with and consideration is being given to appointing some assets jointly between surviving spouse and adult child, some solely to surviving spouse and some solely to adult child. Such disposals will be deemed PETs re: adult child for IHT purposes.

If the Trustees sign Deeds of Appointment appointing the assets as above, will the beneficiaries receive @ date of death value so that there is no disposal now for CGT purposes because the assets never vested in the Trustees or could HMRC argue that the residue has been ascertained and, if so, at one point must we accept that the residue has been ascertained? For example, if executors are aware of the value of all assets and liabilities within a month from death, has the residue been ascertained at that time even though there could be months or years before the administration has been completed? Or can residue only be ascertained once it is clear what the cost of the administration expenses are?

I really would be grateful to hear from anyone who has had experience of dealing with this, particularly regarding appointments from a discretionary trust where assets haven’t yet vested in the Trustees by the Executors.

Geraldine Craig
Tanners Solicitors LLP


(Simon James Northcott) #2

HMRC look to an early date for ascertainment-see the CGT manual, CG30700 onwards, and specifically re s144, CG31430.

Simon Northcott