DoV to create Trust for minor Grandchild

Trusts Discussion
1

Legatee to receive £50K (Fifty). She would like to execute DoV to create a Trust for her minor grandchild vested until 18.

We are the Exors with a nephew of the deceased

Am I correct that:

  • DoV to create the Trust Fund of the £50K.
  • Deed of Retirement/Appointment of New Trustees required as neither we or the
    nephew want to be Trustees

Also, will the income be taxed on the Grandmother as per parental settlement rules. I think not but confirmation would be appreciated.

2

As you say, a DOV is needed to create the trust if reading back for IHT and/or CGT is required. However, the DOV could be worded to appoint trustees of the legacy as well, thereby avoiding the need for a deed of appointment and retirement of trustees of the Will.

The settlement rules for income tax only apply to parents, not to grandparents. The original legatee will still be treated as settlor for income tax purposes, but provided she is excluded from benefit there should be no adverse income tax consequences.

3

Much appreciated Diane, thanks