My clients wish to appoint a sum of money to the deceased’s granddaughter and the balance in favour of the surviving spouse in order to terminate a NRB discretionary trust. We are within two years of the deceased’s death and have the Grant of Probate in the estate but the administration of the estate has not yet been completed. The terms of the Will are that the overriding powers shall be exercisable during the Trust Period and the Trust Period is defined in the Will as “… the period of 80 years beginning with the date of my death.” Is this wording sufficient to mean that the appointment can be made before completion of the administration of the estate?
Yes, the trustees may make an appointment, notwithstanding that no assets have been appropriated to them in satisfaction of the trust legacy.
If assets are appropriated to the granddaughter or spouse in consequence of the appointments, for CGT purposes they would normally receive such assets as “legatee” under s.62(4) TCGA 1992, although for distribution purposes, such assets would need to be revalued as at the date they are appropriated to the granddaughter or widow (applying Re Charteris, 1917).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
I agree with Paul. Appointments prior to residue having been ascertained may be made by the trustees on the basis that the trust has been validly constituted from the deceased’s date of death.
Typically, no CGT charge arises on any appointments.
Malcolm Finney
Many thanks Paul.
Lisa Homer TEP
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