Non UK Trustees

Hello,

My colleague has a matter where a gentleman has died intestate leaving minor beneficiaries who live in the US. The beneficiaries’ mother lives in the US, and she will be acting as trustee alongside a friend. I believe that if one of the trustees is resident in the UK this will be a UK trust, but if both trustees are resident in the US it will not, is this correct?

The beneficiaries’ mother has been advised that if both trustees are in the US there will be no VAT on our charges, but if one is resident in the UK, we will need to apply VAT, so this is the only reason she is now considering a US trustee. Are there any particular advantages to there being two US trustees aside from the VAT issue? Or is this something I should refer to a US lawyer to advise on?

Many thanks,

David Harris
Wellers Law Group LLP

I’m not sure if you are referring to “trustees and trusts” or “Personal Representatives”.

Income tax and CGT
If all the trustees are UK resident then the trust is UK resident.
If all the trustees are non-UK resident then the trust is non-UK resident.

Where the trustees comprise at least one UK resident trustee and one non-UK resident trustee the trust is non-UK resident only if the settlor was neither UK resident nor UK domiciled at the date the trust is made. Otherwise, the trust is UK resident.

PRs
Wrt PRs they take the residence of the deceased residence status for CGT purposes.

Wrt PRs if the deceased died either UK resident or UK domiciled and at least one PR is UK resident then all the PRs are UK resident for income tax purposes. If, however, the deceased died both non-UK resident and non-UK domiciled, if at least one PR is non-UK resident all the PRs are non-UK resident for income tax purposes.

Although it may not be relevant here, if there are significant USA situs assets and significant UK IHT it is important that any PRs are able to access any such USA situs such assets. If the PRs are non-UK resident then at least in theory they may refuse to discharge any UK IHT on the USA situs assets.

I’m unable to comment on the VAT position.

Malcolm Finney

One point to bear in mind is the USA reporting requirements imposed upon the mother. Form W-8BEN-E is the most common form to the filed with the US IRS, but there are several other forms to be filed depending upon the amount of monies in question (for example most monies under US$10,000 are not reportable). If the underlying assets can justify the cost I suggest contacting someone familiar with the those reporting requirements, and suggest Charlie Smith or Nilar Chan at East Asia Tax / Sentinel with whom I have worked for years even though they are based in Hong Kong. There are many Chinese families in Hong Kong with USA connections hence their experience is substantial…
Peter Double / Probate Resealing Services