trustees
The trustees are the legal owners of the assets held in a trust. Their role is to: deal with the assets according to the settlor’s wishes, as set out in the trust deed or their will. manage the trust on a day-to-day basis and pay any tax due.
Can a discretionary trust sell property?
In 1996 an act was introduced, the TLATA, which meant that trustees no longer have a duty to sell meaning beneficiaries can occupy the property or sell, whichever they wish. The trustee always has to act on behalf of the beneficiary and within the general interest of the trust.
Can trustee sell property without all beneficiaries approving UK?
Yes. But is it a good idea to for the trustee to sell the property without all beneficiaries approving? Not really. Putting himself in such a risky position is what a trustee cannot do.
Can a beneficiary live in a trust property rent free UK?
The Beneficiary is entitled to all of the Trust income as it arises. The Trustees must pay any income to the Beneficiary and cannot withhold it. If the Trust property is something more tangible then the Beneficiary is entitled to use it (eg if the Trust property was a house, the Beneficiary could live there rent free).
Why do I need a discretionary trust in the UK?
The trust could be: You can no longer work due to illness. You set up a discretionary trust to make sure you have money in the future. You’re the settlor – you may also benefit from the trust because the trustees can make payments to you. This is a trust where the trustees are not resident in the UK for tax purposes.
What is the tax rate for a discretionary trust?
If the property is rented out, income tax of £18,000 per year. Discretionary trusts are subject to income tax at a rate of 45%. If the trust was an interest in possession, it would be subject to tax at a rate of 20%. Property expenses could be deducted which would reduce the taxable income.
Can a real estate trust claim principle private residence relief?
If the beneficiaries choose to live in the property, it can trigger their principle private residence relief, which exempts that property from capital gains tax. When the property is sold, the trustees can claim exemption for the whole period of ownership as long as it has been occupied one beneficiary at all times.
Do you have to pay inheritance tax on transfer to discretionary trust?
Even if no Inheritance Tax is due on the transfer you may need to add its value to the deceased’s estate when you are working out the value for Inheritance Tax purposes. The additional threshold will not apply to transfers of a home or any other assets to a discretionary trust before a person died.
