I have seen reference on this forum to constituting a pilot trust by transferring money into the trustee’s client account. It seems to me that this would not properly constitute the trust as the client account is held on trust by the firm for the client. Therefore, putting money into the client’s client account does not amount to a transfer of legal title to the trustee, at best it is a transfer of beneficial title, the firm holding the legal title as trustee. Have I misunderstood?
I have never seen much point in transferring in a nominal sum. Pilot trusts are intended to receive substantial property later and will be completely constituted then by that being transferred in, often just by DOT. Can anyone specify a disadvantage that would be suffered by this approach? In my view there are advantages as well as avoiding the faff of £10 notes pinned to the deed etc. The trust is not registrable on TRS until later and the commencement date for RPT IHT charges does not start until later: s48A IHTA 1984
Jack Harper
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The same questiom comes to mind. The only answer I can come up with is that, if one is transferring a large asset into trust, it offers more security to the settlor to transfer it after the trust is created as this ensures it is held on the terms of the trust, rather than being transferred before the the deed has been executed. However, couldn’t that issue be resolved by executing the deed first and then transferring the large asset?
Exactly so. I have regularly seen trusts set up by solicitors according to what is obviously their SOP. They set up the trust with the £10 fandango and a few days later transfer in the “large asset” by DOT or appropriate transfer of the legal title. What advantage is there in the fandango? I really can’t see any at all
Jack Harper
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