I have a Trust, which was created on the death of an adult, who died intestate leaving a spouse and minor child. This was in 2003 before the changes to the intestacy rules.
We have original advise from the solicitor which stated the surviving spouse had an IIP on 50%, and that the child’s share was on statutory trust until attain the age of 18. It further stated that there was no current entitlement to income (in respect of the child’s share) and that the income would be taxed at RATs.
The solicitor has now advised that whilst the child’s share is indeed contingent on him attaining 18 there was no discretion on this share of the income and that the RAT shouldn’t have applied. Instead, the child should have been taxed on his share of the income.
A vulnerable beneficiary election had been made, but as the Trust income was fully distributed it resulted in tax pool issues.
My confusion lies in how this trust (child’s share only) should be taxed. The only legal document I have seen doesn’t appear to state the Trustees responsibilities or beneficiaries entitlements, but references the Trustees executing part iv of Admin of Estates 1925.
Can anyone shed any light? my inclination is that the original position was right; the child’s shares didn’t have an express right to income and was taxable at RAT’s.