TRS - two registerable trusts within the same will?

I am unclear about what to do re TRS in the following estate scenario:

Date of death 1 July 2020

Executors also named as trustees in the will.

Residuary Estate given “to my trustees to hold on the trusts below”

The will contains a “Trust of Residuary Estate” which I am told is a charitable selection trust. Trustees have discretionary powers as to capital and income.

The trust has not been constituted as yet.

Is there a trust of residue until the residue is assented to the charitable selection trust?

If so there would appear to be two registerable trusts.

In the example of George on TRSM 23020 it states: However, provided the trustees are the same this is not a different trust from the residuary estate trust and only one registration is required.

If only trust is required to be registered, is it clear which one? Should it be the trust of residue two years from the date of death (effective deadline of 1 September 2022) or the charitable selection trust after assets have been transferred to the trustees?

Luke Summerford
Watson Associates

This comment has to be made without seeing the Will but the words “Residuary Estate given “to my trustees to hold on the trusts below”” do not in themselves constitute a trust but refer to the “below” trust of residue which is the only trust that is a candidate for registration. (The assumption has to be made that the Will does not provide for any other gift on trust). A trust which allows the particular charities to be selected may well be a charitable trust for most relevant purposes including tax but not for exclusion from registration as a non-taxable trust under para 5 Sch 3A of the Regs which requires it to be actually registered as charitable.

My view is that a will trust is not registrable until it is completely constituted with some assets from the estate in respect of which the admin period has ended. With pure personalty an assent is not necessary and when the period ends is a question of fact: the occurrence of the point in time at which the assets are no longer required for administration. With land which includes leaseholds an assent is necessary. If that point has not been reached by the second anniversary of the death then no trust yet subsists which can be registered.

HMRC clearly accept (useful, as it is the law) that there cannot be a trust over an asset while it is still subject to administration. HMRC have not explicitly confirmed that my above view in relation to the two year period must logically be correct. They seem to hold the view that after two years have passed the trust that will eventually come into being, if sufficient assets then remain to become its trust fund, should be registered. I have made the point here that if that is a virtual certainty to happen very little is lost by registering “early”. In theory, if all the assets destined for the trust were used e.g. to pay debts, the trust would never come into existence with the result that a trust would have been registered that never existed. My guess is that if the trust is registered a month before two years expire the risk of that happening will be ascertainable in most cases to a high level of confidence. I believe that HMRC are still being pressed to state their position on the matter.

I would add that you would need to be certain once the trust came into existence that the relevant charity exemptions from tax applied, if relevant, to prevent the trust needing to be registered as taxable.

Jack Harper