FW: TRS for Life interest trust and appointments out

Trusts Discussion
1

I have an estate where there is a portfolio which passes into a life interest for spouse followed by a discretionary trust which has been drafted for issue. In other words the issue cannot all be ascertained and, whilst the default of appointment is clear to named beneficiaries, obviously there may still be some issue yet to be born etc. In the circumstances

  1.   Do we have to establish and register the trust on the TRS? As income will be mandated all to spouse I assume not but am unclear

  2.   I assume we then draft a deed of appointment to appoint out to the spouse absolutely as we cannot do a deed of variation to simply remove the discretionary trust

Thanks

Lis

Lis Whybrow
WhatleyRecordon
Solicitors
12 Worcester Road
Malvern
Worcestershire WR14 4QU

Tel: 01684 892939
Fax: 01684 892327

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2

Definitely if the trust is constituted. Following MLD5, all UK express trusts have to be registered by “Summer” 2022 (tbc) irrespective of tax liabilities. There are a few exceptions but these are unhelpful here.

Yes, you’d need an appointment (if the widow(er) is an object of the power) or an advancement (if there is an express power in favour of the widow(er)) to bring it to an end.

Andrew Goodman
Osborne Clarke LLP

3

Whilst we are given no information about the family circumstances, I wonder why it is suggested to appoint out to the surviving spouse absolutely.

If it is to preserve the RNRB, etc., there might be benefit in merely exercising the power of appointment to eliminate the discretionary trust arising on their death.

This would also keep the value out of their estate when looking at care fees or other mean-tested benefits. Over time, the spouse could release their interest in parts of the trust fund to benefit the remaindermen if appropriate, which would be PETs.

I believe that the appointment could be made revocable during the lifetime of the surviving spouse without any negative implications, although I am sure that other correspondents will comment if this is not the case.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals