Precatory trusts give rise to a number of potential problems. ‘Reading back’ is achieved for IHT if assets are distributed in accordance with the testator’s wishes (s. 143 IHTA). But what about CGT? And what if the executor dies after the testator and before the wishes have been carried out? The assets will pass as part of the executor’s estate (subject to IHT).
If there are valuable assets it is probably better to leave them in a short term discretionary trust - which is, I think, the approach favoured in Practical Will Precedents.
Paul Davies
Clarke Willmott LLP