Half-secret trust - disclosure to HMRC


#1

I am instructed by X to draft an appropriate clause which will qualify for the reduced rate of IHT. She does not wish for the name of the charitable beneficiary to feature in the will as she knows wills are public etc. It’s therefore vital that the HST works to secure that reduced rate.

She might be persuaded to leave the sum to trustees to apply for charitable purposes at their discretion or the whole estate on a DT etc., but…

  1. The partners of my firm are appointed as trustees. I am aware of the communication requirements in order for HSTs to be valid and that communication can take place via an agent (i.e. me?). I will advise that X prepares a side letter to her Trustees giving the name of the charitable beneficiary. Would it be best practice or pedantic to inform all the equity partners prior to execution that they will be obliged to follow X’s wishes?

  2. When applying for the reduced rate of IHT, presumably the trustees will need to disclose the identity of the charitable beneficiary to HMRC. Can they do this? I suspect we can get X’s written consent to do so…

Any thoughts or observations appreciated.

Gemma Hambright
Hansells


(ianmckeever) #2

Couldn’t the gift be made to the Charities Aid Foundation or a similar charity organisation for onward transmission to the actual charitable beneficiary. The charities Aid foundation is itself a charity but what it does is provide services to other charities including facilitating donation.

That way the charity specified in the will would be the Charities Aid Foundation and the actual charity ultimately to benefit could be specified elsewhere. That would also enable the client to change her mind at some future date and give to another charity without having to change the will.

Ian McKeever

Ian McKeever & Co Consulting Actuaries