Trusts

Question 1

Bare Trust transfer in is a:

Answer 1

PET

Question 2

Bare trust IHT is free after:

Answer 2

7 years

Question 3

Bare trust IHT Initially?

Answer 3

No

Question 4

Bare trust, can you change beneficiaries?

Answer 4

No

Question 5

Bare trust income tax position?

Answer 5

Income is taxed on the beneficiary using their own rates and personal allowance

Question 6

Bare trust cap gains position?

Answer 6

Capital gains are taxed on the beneficiary using their rates and full annual exempt amount

Question 7

Bare trust IHT liability?

Answer 7

On the settlor if death occurs within 7 years of the PET.

The trust fund forms part of the estate of the beneficiary if they should die.

Question 8

Discretionary trust transfer in is a:

Answer 8

Chargeable lifetime transfer

Question 9

Discretionary trust IHT free after

Answer 9

7 years

Question 10

Discretionary trust IHT liability?

Answer 10

Only if transfer is over the NRB and then at 20% if trustees pay and 25% if settlor pays

Question 11

Discretionary trust, can you change beneficiaries?

Answer 11

Yes, trustees have discretion to change beneficiaries

Question 12

Discretionary trust income tax position?

Answer 12

Trust has a standard rate band of £1,000. Above this trustees are charged at the rates applicable to an additional rate taxpayer.

Question 13

Discretionary trust Capital gains position?

Answer 13

The trust has a CGT exempt amount of 1/2 the normal amount (split between number of trusts set up by the settlor to a minimum of 1/5 each)
CGT rate for trustees is 20%

Question 14

Discretionary trust IHT liability?

Answer 14

At outset, if gift is over the NRB. Back in estate if death within 7 years.
Trust fund potentially chargeable every 10 years (periodic charge) and when capital is distributed (exit charge (both no more than 6%)