Good afternoon all
I have a client who wants one of a discretionary trust beneficiary to be “charities involved with the relief of poverty and ecological works”. I am struggling to find confirmation of whether this is effective wording or find any precedent. I unfortunately don’t have any one to ask in my office so I would be very grateful for anyone’s wisdoms.
Consideration might be given to giving the relevant share to charities of the trustees’ choice and specify the nature of such charity in the accompanying letter of wishes.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Why not define the discretionary beneficiaries to include
00.00 "any institution (whether corporate or not) which is established for charitable purposes only and is a charity under the law of England and Wales within the meaning of section 1(1) of the Charities Act 2011.
Also have a power for the trustees to add beneficiaries.
These two should allow you at a future date after death to search around for suitable charities.
Outline the purpose in very wide terms in the letter of wishes (and regularly invite the testator to review that Letter of Wishes and sign updates regularly, say every year or whenever there is a change in circumstances. One would need to be very careful in the Letter of Wishes to not be too narrow in the explaining the wishes or you might have a litigation on your hands from a disappointed charity.
As an aside, I have a discretionary family trust which allows distributions to charities.
If a distribution is made to a charity I assume this is exempt from an exit charge as charitable payments are exempt from IHT.
I ask as IHTA 1984 s 76 gives the exemption for property held for charitable purposes only without limit of time.
It is the word HELD that gives me doubt. Does it have to be set aside first (with no time limit) or would a direct donation to a charity also be covered without first being set aside?
I assume a trustee note along the lines of a charitable payment of £X to charity Y has been agreed by trustees would suffice if the payment was then made afterwards.
Hi Nick
See p3 /4 of IHT 100. You show assets have left the trust and then claim a deduction for the charity exemption, giving details of the charity etc.
Sara
Sara Spencer | Trust Manager
Sara Spencer Ltd, 8 Kingsway, Harrogate, HG1 5NQ
07952 651881 | 01423 524114
Sara.spencer@trustandestate.co.uk
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thank you.
Do you prepare any deed for a charitable payment in advance, or just make the payment?
Hi Nick
You would need to look at the terms of the trust to confirm the documentation required.
Sara
Sara Spencer | Trust Manager
Sara Spencer Ltd, 8 Kingsway, Harrogate, HG1 5NQ
07952 651881 | 01423 524114
Sara.spencer@trustandestate.co.uk
Privacy Notice - details of our legal basis for processing your information, retention period for data held, security of your data, your rights under the General Data Protection Regulations (GDPR) including the right to complain can be found in our full Privacy notice
This email and the information contained in it and in any attachments are confidential and may be privileged. If you have received this email in error please notify us immediately. If you are not the intended recipient, you are not authorized to, and must not use, disclose, copy, distribute, retain or rely on this email or any part of it.
Please note that whilst we try to ensure that attachments are virus-free, we cannot accept responsibility for situations where this is not the case.
Any information in this email is advice from the business and not the sender.
Sara Spencer Ltd is a company registered in England, registration number 12304408, registered office 8 Kingsway, Harrogate, HG1 5NQ