Jointly settled trusts - available NRB?


(Anne Slater-Brooks) #1

I am having a complete blank in relation to a comment from a client.

Two sisters are discussing setting up a trust for the benefit of the daughter of one.
They have been told they can set it up jointly even if one provides all the money to establish the trust.

I’ve cautioned against this because HMRC would regard the trust presumably as being settled only by the sister who provided the capital? Secondly I’m thinking the trust would only have one NRB whereas if they were to establish two trusts each would have a NRB. Is this the case or could they claim two NRBs on a joint trust? I’m pretty sure the answer is no but I’m doubting myself

Anne Slater-Brooks
Ingenious


(Simon James Northcott) #2

If joint, there will be two NRBs if they both put in their own money, but it can get complicated. I would go for two, .but they must each put in their own money otherwise hmrc will say one sister has settled everything

Simon Northcott


(Claire Spinks) #3

The IHT position of a Trust relies on who settled it. So if two people settled then for IHT purposes you have two trusts with two NRB’s, even though there are only one set of Trustees, one name for the Trust, one tax return etc.

The sister (first sister) with the money gifting to the other sister could be an option, but it would need to be clear that, the gift was genuine and outright. Depending on the amounts involved (if the total to be settled by both sisters were over the original donor sisters NRB), HMRC could want to argue that the gift had been made to the second sister, so that the first would avoid or mitigate a CLT. Equally, I think you have that issue even if two trusts are created.

Claire Spinks
British Taxpayers