Query re. liability for professional costs of registration of a LIT and co-ownership trust on the TRS

Trusts Discussion
1

The scenario involves a second marriage, Husband and Wife hold PPR equally as TinC.

Husband dies and leaves his share of the property on LIT to Wife and then to his adult daughters X and Y (from previous marriage) as remaindermen.

Wife and professional Solicitor appointed as both co-Executors of the estate and co-trustees of LIT of his share of PPR.

X and Y are also the equal residuary beneficiaries of the estate. Wife’s interest in the estate is limited to the LIT.

Professional Solicitor trustee now wants to register on TRS:

i) the LIT; and
ii) the now non-exempt co-ownership trust.

The question of liability of payment of the professional fees to register has arisen. Should the cost of the registrations by the professional co-trustee’s legal practice be borne by the Wife, as co-trustee and lifetime beneficiary, from her own personal funds. Alternatively, is there an argument that the estate should bear the costs?

2

The liability for TRS registration of the trust of land over the (former) matrimonial home is that of the surviving trustee – the widow – who will have a right of reimbursement from the trust fund.

However, is the liability a capital or an income expense?

On balance, I suggest that although I can see an argument that it is an income expense (and, therefore, payable by the widow, personally) it is probably a capital expense payable by the widow as trustee and recoverable from the trust fund, in due course.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals