I am currently dealing with a sad case where husband has passed away without a Will, leaving his wife and 3 young children.
Under the rules of intestacy, my understanding is that three statutory trusts are deemed to be created, one for each of the minor children.
Due to the make up of the estate, there will be rental properties passing to the children’s trusts, such that income will be arising on an annual basis. We would be looking to distribute the income earned for the children’s benefit.
Rather than having to make 3 vulnerable persons election, complete 3 trust tax returns, complete 3 R185’s and deal with the tax pool issues, due to the 45% tax credit attaching to distributions, I was wondering if anyone could confirm that we would be able to advance all of the capital of the trust to the beneficiaries such that 3 bare trusts are created.
I believe this should be possible under s32, but I am struggling to find confirmation that this can be done.
This would greatly simplify matters, and keep professional filings and costs to a minimum for the family.
I also assume that converting to bare trusts would not create a parental settlements problem? I.e. I assume any income arising going forward would be deemed to be taxable on the minors directly, rather than the mother (where income exceeds £100 in the year)
Any help/comments would be hugely appreciated!
Thank you all