Two Settlor Trust


(Umesh Gohil) #1

My clients husband and wife own a buy to let property as tenants in common.
This property is valued at £300,000.
They each wish to gift their share to 1 discretionary trust for the benefit of their adult son.

It has been brought to my attention that there may be concerns over 2 settlors for the same DT in that the income tax rules can become complex after first death of one of the settlors as you have two sets of rules applying to one trust (settlor alive/dead).
I would appreciate if someone could shed more light on this point as I am unaware of this potential income tax issue.

Umesh Gohil
Bell Maison


(malcfinney1) #2

It seems unlikely that the intention of H and W is for separate funds to be created each held on separate trusts. In which case a single settlement will have most probably been created. The death of H or W will not affect the income tax treatment of the income of the trust.

ITTOIA ss 644 and 645 specifically deal with the issue of two (or more) settlors but only for the purposes of Chapter 5 Part 5 ie “settlor interested” trusts which is not relevant here. Similarly TCGA 1992 ss 86 and 87 (non-resident trusts) are not in point.

However, there may be two separate settlements for IHT (IHTA 1984 s44).

Malcolm Finney