Estate with a Discretionary Trust, and a mortgaged property


(Fiona Dodd) #1

Dear All,
I have another tricky estate where I am struggling to find a neat solution.

The Deceased had
joint assets with her son of approx. £35,000
business assets of around £3,000,000
her home £325,000 subject to a mortgage of £200,000
investment property valued at £200,000
Liabilities of £100,000

She left her business to her son, he took the joint assets, and the residue passed to a discretionary trust.

There are 2 adult children. They want to wind up the DT as they feel there is no need to continue it. Daughter is currently overseas, and wishes to return to the UK and live in the home (she has other properties in the UK that are currently rented, the home is not). Son is happy with this. Daughter and son wish to keep the investment property 50:50. Son is happy to pay off the general liabilities in the estate.

My question is whether it is possible to structure this in such a way as not to cause an SDLT charge for the daughter in respect of the mortgage on the property. Clearly if this tax has to be paid, it has to be paid, but she’s unwilling to pay £7,500 if she doesn’t have to!

And advice or guidance would be most appreciated, thank you.

Fiona Dodd
Mayo Wynne Baxter