Non-UK Executor Trustee

[nia]

My father was 90 when he died this year and left his estate equally to myself & my 2 sisters. There’s a house (1/2 of which we received by a DoV after our mother’s will 8 yrs ago) and roughly 40,000 cash each. Dad’s solicitor drew up a discretionary will trust last year, mainly because my younger sister has very little money sense - and after a stroke my older sister is getting by on a disability benefit & council tax relief. I am more fortunate. I’ve lived abroad for years and have a reasonable pension. Even so my inheritance was written into this trust.

I believe the solicitor wanted to assume the role (& income) of Trustee because, although I am 1 of 2 family executors, 95% of the will is about how the firm will handle the trust if one of the executors can’t. Then - the day after my father signed his will they contacted me and ‘mentioned’ I couldn’t be granted probate since I lived abroad. Even so, I did the work and received the grant in May.

I’m just learning about discretionary trusts, probably not a tax efficient way to handle this modest estate. We’ve agreed to rent the house for 2-3 yrs. Its sale should supplement pension income just when needed. My younger sister’s agreed that her cash goes towards paying off her very high interest loans asap. My inheritance will go to my sons which just leaves the older sister’s income to be protected by this trust.

Questions:
Does my role of Executor / Trustee of the estate affect my tax exempt status as a non-UK resident of 20+ yrs?

The house has never been registered. Has it technically changed hands when my father died or can we wait until we sell it on behalf of his estate?

If the d/trust remains, how will my sons (non-UK res) recover the high tax on payments?

The will defines ‘beneficiaries’ as descendants; spouses of descendents; any person added by the trustees. Could payments (equivalent to CGT max) be made to the younger sister, her husband and their son (21) so they all pay down that debt now?

If it’s more tax efficient in the long run, can we change the will by a deed of variance but still apply the terms of a discretionary trust to the older sister’s inheritance, thus preserving her benefits? The letter of wishes names the 3 siblings as beneficiaries so can we revise the will?

I thank you for your help and hope my enquiries are clearly outlined.

[cliffordpope]

There appears to be nothing legally preventing a non UK resident being either an executor or trustee. My brother has lived in America for 20 years but was an executor of our father's will and a trustee.

But practically it has been a nuisance. Many financial institutions would not accept a non-UK resident. Some accepted it but made difficulties over verifying non-UK identity. Some would not accept a designation in the name of a trust at all, some required our personal names not the trust, some accepted designation to the trust and my name alone but not to a US resident.
Combined with an erratic postal service and many important documents having to be copied and certified because originals had been lost in the post, in he end we gave up, and my brother resigned as a trustee.

[nia]

Thanks Clifford, for offering some advice, although my question was more about how the UK tax system regarded non-res Trustees. In my journey through the web to find information I seem to recollect that non-res Trustees of a UK trust are regarded as UK-res for tax purposes. I hope that isn't the case.

I'd be pleased to have members replies to my other 4 questions too. Can anyone help please

Nia

[Lee Young]

In response to your questions:

1 Your role as executor/trustee will not affect your personl tax exempt status (as you describe it).
2 It has changed hands and yes that will mean it will now need to be registered with the land registry.
3 If any income is paid out it is deemed net of 50% income tax. If they are not higher rate income tax payers then they can claim back the overpayment via a tax reclaim each year.
4 The trustees will have the discreion to pay any amount to any beneficiairy pretty much for any purpose. So yes, such payments can be made to reduce their indebtedness.
5 Deed of variation not needed because of the flexible discretion the trustees have - the trust can be retained for your sister and her family, but the other (intended) beneficiaires can be paid outright, if that is desirable.

If you want any further guidance please feel free to contact me.