I have a situation where there a Discretionary Will trust has always been perceived as being in three shares, there are 3 children of the deceased who are the trustees and default beneficiaries and a broad class of other beneficiaries grandchildren etc.
The trust is shortly to receive the income (for the first and only time) from another trust which will be taxable at 45%. Two of the three children have sufficient minors to reclaim all the tax between them but do not wish the benefit of it to be brought into account leaving one share of the trust potentially short changed. The two Trustees would like a three-way split and to reclaim their 1/3 share of the tax but this would leave one beneficiary at an overall financial disadvantage with HMRC retaining some of the otherwise reclaimable tax. There will be sufficient capital to allow for leveling up if needed. No one wants to fall out and there is a letter from the deceased to say all life time gifting is to be brought into account so that overall, each child receives the same, but no one anticipated a tax rebate and I just wondered what is the usual practice is in these situations.