CGT Calculation on assets inherited from a trust

Trusts Discussion
1

Dear All,

I would be most grateful for advice on the following.

A father set up a trust in his will in the 1980s for the benefit of his disabled daughter. Her brother was appointed as one of the trustees. The will also specified that should she predecease her brother, then he should receive any assets left in the trust. She has now passed away (intestate) with her brother as next of kin. The assets, which were cash and shares (around £60,000) have been transferred to her brother. The shares were transferred as stock. My question is about the capital gains calculation when the shares are eventually sold. Is the acquisition cost the price of the shares when they were bought by the trust (in 2006), or the market value on the date that she died ?

Thank you in advance for any advice.

2

The answer may depend on whether the trust was a discretionary trust or an intertest in possession trust and, if the former, whether it qualified as a disabled person’s trust under s.89 IHTA 1984.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

3

Hi Paul,

thank you very much for your reply.

The daughter was mentally disabled and was not capable of making financial decisions so I think it would be classed as a discretionary trust.