I have a statutory trust which is held for the three children of the deceased (all are minors). The trustees are the ex-husband and the partner of the deceased.
Two of the children are from the marriage to the ex-husband and the remaining child is that of the deceased’s partner and the deceased.
the trustees want to be trustees of their own children’s trust rather than jointly responsible for all three children.
The deceased died in 2012, but the estate has only recently been finalised and the money released to the trustees.
Can I do a resolution for an Advanced Settlement for the children of the ex-husband to place their share of the trust into a separate settlement, whilst at the same time retiring the deceased’s partner as a trustee of the new settlement and appointing an new trustee?
What are the precise terms of the “statutory trust”?
It sounds as if the trustees are assuming that the assets are shared
equally between the 3 children - and intend to treat them as if one third
belongs to each. But what if one dies under 18, and the funds should pass
to the other children but have been spent?
I take it that the deceased died intestate, so that the statutory trusts referred to are as set out under the Administration of Estates Act 1925.
As the deceased died in 2012, the trustees may only advance up to 50% of any beneficiary’s presumptive share, so that an appointment of the whole of the marital children’s combined share would be a breach of the trustees’ powers.
Even if the Inheritance and Trustees Powers Act 2014 applied, the trustees would have a number of other issues that could complicate the situation:
Despite the appointment, there may still only be a single settlement for CGT and income tax purposes, so that transactions by one set of trustees may adversely impact the tax position of the other trustees.
Even if the trustees agreed to share the annual allowances, etc. 50/50, HMRC may not recognise any such agreement and assess both funds as a single settlement, which could include pooling acquisition values if both sets of trustees hold the same shares
If only the “shares” of the marital children could be appointed, the share held for the partner’s child would still pass to the marital children if he/she does not attain age 18 whereas, unless specifically provided for, the partner’s child will not benefit should either or both of the marital children fail to attain age 18.
The trust arises on intestacy of the mother. It is intended that the funds are retained by trustees until the children are 18. The issue is that the two fathers who are the administrators of the estate want to be able to manage their own children’s “share” with another trustee each, rather than with each other as trustees. I would have done an advanced trust, to set up separate funds with gifts over to the other children in the event that one of them didn’t attain 18,but the death was in 2012, so can only advance upto one half under S32 TA 1925. So I am not sure if it can be done.
It seems to me that there may be a slightly different way of achieving what you are wanting to achieve. It is possible to have separate trustees for different sub-funds of the same settlement. As noted already the assets will remain a single settlement for tax purposes, and there are some other practical considerations to address, so a degree of co-operation will remain necessary. I suggest the second trustee of each fund should be the same person (ideally a professional) , thus forming a ‘link’ between the two parts of the trust.
I was hoping I could do this, but wasn’t sure of the statutory power or precedent to do it. They parties do want a professional trustee involved. Can you direct me to a suitable precedent please?
Precedent E7e1 in Practical Trust Precedents could be adapted to your purpose, but really there is no special magic to this. The ability to appoint separate trustees of a distinct fund is confirmed by s. 37(1)(b) TA 1925.