Employee Benefit Trust

[taxmanUK]

please help me!!!
under my discretionary trust i have given £100,000 to the said trustees to use the income for such period as the law allows to provide annual holidays for employees, ex-employees their families and friends of my business (building contractors) is this disposition viable or not? if not then why?

[johnfkavanagh]

There is no reason why the disposition you mention should not be viable provided that the terms of the trust are clear. Is this a discretionary will trust? I can only assume that you have taken legal advice on this and I am not sure why you are having any doubts about the efficacy of the arrangements you have made.

John Kavanagh
UK Tax Consulting Ltd
Chartered Tax Advisers
www.uktaxconsulting.co.uk
mail@uktaxconsulting.com

[bob.fraser@towrylaw.]

I think that I would obtain a proper legal opinion on the wording of this trust. To be valid, a trust has to fulfil a test known as the "3 Certainties". In layman's language, this means that the trust must be specific about:

The fact that a trust is being created in the first place. You would seem on firm ground here.

What property/asset is being gifted. You need to specify where the £100,000 is coming from. I presume this is OK.

Who the beneficiaries are. This is where I think you need to tighten up the wording. It will be easy to identify employees, and presumably ex-employees, but "friends" is very wooly. You would be better to specify the contractors by name, or some other clearly identifying feature (such as any firm which has a formal contract). Even then, you would need to specify who in these firms could benefit.

Please note that I am not a lawyer.

[Anthony Nixon]

It is very hard for anyone to comment on individual provisions from a trust instrument like this.

You really need to consult a lawywer with a good knowledge of trusts to advise you on the whole document.

This is one of my specialisms and if you would like any further help please do not hesitate to get in touch.

Anthony Nixon
Partner
Lester Aldridge Solicitors
Alleyn House
Carlton Crescent
Southampton
SO15 2EU

Tel: 023 8082 0442
Mob: 07881 920742
Fax: 023 8082 0441
Email: anthony.nixon@la-law.com
Website:www.lester-aldridge.com

[johnfkavanagh]

I hope that neither the querist nor the other contributors think that I am trying to discourage the querist from seeking a legal opinion on this - far from it. It just seems to me that a lawyer who is capable of drafting a trust in the form mentioned by the querist should also be capable of explaining the practicalities to his client. I would be shocked if any lawyer drafted a deed or will which actually included a provision to benefit the "friends" of the deceased/settlor as a class of beneficiaries but if my fellow contributors have reason to believe that there really are lawyers out there who are that bad, then the scales have been lifted from my eyes!

It could be that a lawyer was not involved. While I have frequently seen clients make mistakes with DIY tax planning, I have yet to come across a client who has drafted his own employee benefit trust!

John Kavanagh
UK Tax Consulting Ltd
Chartered Tax Advisers
www.uktaxconsulting.co.uk
mail@uktaxconsulting.com