Discretionary Trust and Charity

Trusts Discussion
1

We have quite an unusual case whereby the sole beneficiary of a discretionary trust is charity. We have little detail on the background.

The trustees wish to remove charity and replace it with family members with a view to making capital distributions

We are trying to ascertain the IHT treatment. Guidance would suggest that:-

  1. The removal of the charity would result in a Flat Rate Charge; and
  2. The value of the settlement would then be regarded as relevant property.

Any thoughts would be most welcome.

Andrew Magilton
TFO Tax LLP

2

The first question is whether the trustees have power to add beneficiaries who arenot charities. It’s not just a tax issue.

Amanda Freeman
Myerson