CGT - specific gift to trustees of property sale proceeds

Trusts Discussion
1

Hello

A Will contains a specific gift of a property to the trustees to ‘sell the same and to hold the net proceeds of sale’:

  1. to pay IHT attributable to the property to the exoneration of the residuary estate and
  2. to pay the remaining proceeds to 4 beneficiaries

The Executors and Trustees are the same people.

I am confused as to what kind of trust this is, how to report the CGT and what allowances are available.

Is the above an express bare trust of the sale proceeds, so that the personal allowances of each of the beneficiaries can be used, or is this an express trust comprising a gift of property to the trustees, so it will be the trustees selling so a Trust CGT return is required and trust AE will be available, or is this the executors selling, so an Estate CGT return is required and AE for estates is available?

The 2 residuary beneficiaries are also 2 of the beneficiaries of the above gift.

Any help would be appreciated.

Thank you.

1 Like
2

It would be open to the beneficiaries to seek for the property to be transferred to them provided that they pay the IHT (and interest thereon) attributable to the property.

On that basis, I would view the gift in the same way as a specific devise subject to payment of IHT.

The executors could appropriate the property to the beneficiaries, subject to a charge for the IHT and interest, and then sell as bare trustee, thus utilising the individual beneficiaries’ personal CGT allowances and tax rates to reduce the overall CGT charge.

If the executors sell the property without first appropriating it, the doctrine of relation back does not apply so that the sale in that circumstance will be an executors’ sale and subject to CGT as such.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

3

Thank you very much Paul.