Creation of lifetime trusts

Trusts Discussion
1

In January of this year, the Settlor signed the paperwork in connection with a Discounted Gift Trust into which he intended to place the sum of £250,000.

He died two weeks later and before his advisers had been able to release assets from his other investments to populate the trust.

Are the Trustees able to claim that the outstanding monies are due to them from the estate, allowing the executors to include this sum as a liability of the estate?

Or does the fact that the Trust was not populated as at date of death mean that the gift fails?

This is relevant as the reduction in the value of the estate would enable a claim for the Residence Nil Rate Band to be made.

Many thanks

Sarah Bushell
Jobling Gowler Law Ltd

2

I suggest the answer depends on whether the intending settlor had done all he could to give effect to the gift into the trust.

If he had given his advisers irrevocable instructions to raise the monies and pay them over to the trustees, then the gift might be effective and a liability of the estate for IHT purposes.

However, if he could have countermanded his instructions at any time - so that the mandate to his advisers was revocable – I do not believe the trust would have been fully constituted and the promise of payment would have been extinguished by his death.

Very much a fact based situation.

Paul Saunders