Gift of shares in Property Investment Company to a Discretionary Trust – GWOB?

Trusts Discussion
1

My clients wish to make a gift of their shares in their property investment company to a Discretionary Trust (the class of beneficiaries will be limited to their issue). Their Accountant has advised on the current value of the company and projected growth. They will continue as Directors of the company but also want to be the Trustees of the DT. There is also a Directors Loan in place, so they will continue to receive the repayments. I would be grateful for forum member’s opinions on whether the gift would (a) be caught by the GWOB rules due to the Directors Loan repayments, and (b) are there any issues with the Directors also being the Trustees?

Paula Tedder
Spratt Endicott

2

Loans made directly by the settlor to trustees of a settlement from which the settlor is excluded give rise to no GWR. Assuming the settlor of the DT cannot and does not benefit under the DT then the existence of the loan to the company does not create a GWR issue [FA 1986 Sch 20 para 5(4)].

See IHTM para 14395 et al.

Malcolm Finney

3

Many thanks for replying.

Kind regards

Paula Tedder
Spratt Endicott