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Where Taxpayers and Advisers Meet

Revocable life interest trust for all three beneficairies

umeshg1
Posts:44
Joined:Wed Aug 06, 2008 3:55 pm
Revocable life interest trust for all three beneficairies

Postby umeshg1 » Mon Jan 17, 2022 9:59 pm

I have a discretionary Trust where they are three potential beneficiaries. The mother who is a tax payer and two minor who are not tax payers. The settlor of the Trust is grandmother of the minor children. The main source of the income is rental . The trustees will have to deduct 45% tax on the income before paying the beneficairies and the beneficiaries will have to complete a tax return and claim any excess tax they have paid

Question.

To avoid this lengthy administration process of completing tax returns, can the trustee create revocable life interest trust for all three beneficairies . If they do , does the trust still have to pay tax at 45% or 20%

Are there any issues to consider

maths
Posts:8425
Joined:Wed Aug 06, 2008 3:25 pm

Re: Revocable life interest trust for all three beneficairies

Postby maths » Mon Jan 17, 2022 11:02 pm

To avoid this lengthy administration process of completing tax returns, can the trustee create revocable life interest trust for all three beneficairies .
Yes. Three life interests could be appointed.
If they do , does the trust still have to pay tax at 45% or 20%
Trustees would be liable to income tax at 20%. However, this could be avoided by the trustees mandating the trust income directly to the three beneficiaries.

umeshg1
Posts:44
Joined:Wed Aug 06, 2008 3:55 pm

Re: Revocable life interest trust for all three beneficairies

Postby umeshg1 » Tue Jan 18, 2022 10:45 am

Thank you


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