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Where Taxpayers and Advisers Meet

Changing property in a trust from deceased donor to beneficiaries property

Cloisters
Posts:47
Joined:Fri Oct 14, 2016 5:37 pm
Changing property in a trust from deceased donor to beneficiaries property

Postby Cloisters » Thu Feb 08, 2024 10:53 am

I am the beneficiary of a discretionary trust set up in 1998. The trust was given 90% of a property on the death of my father, my 92 year old mother continues to live in the property.

On her death, I would plan to sell the property she lives in.

I do not wish to inflate my estate as it is already over the IHT allowances, so am looking for inventive ways of using this trust with minimal effort and best effect.

I have considered simply investing the trust monies so I could benefit from them if needed, but if not they would pass to my children on my own death without being part of my estate.

However, a novel idea occurred to me that was to "buy" a fraction of my current home with the proceeds of the sale of my mothers house. Although creating a potential event for CGT, I believe this would not apply as it is my PPR.

I could then use the monies that would released to pay off my mortgage and help my children etc., as I see fit with gifts etc. My wife or I are likely on balance to survive seven years.

So, I would reduce my estate with the gifts, whilst not reducing the monies I control as I see it?

What I'm not sure about is the complexity and cost of doing this and maintaining it.

Are there any rules that prevent a beneficiaries property being part of a trust I wonder?

Thoughts most welcome please.

AGoodman
Posts:1723
Joined:Fri May 16, 2014 3:47 pm

Re: Changing property in a trust from deceased donor to beneficiaries property

Postby AGoodman » Tue Feb 13, 2024 11:23 am

Probably fine as a market value transaction but the trust will pay the higher rate of SDLT on the purchase and you may be hit by the ten yearly charge at some point.

Cloisters
Posts:47
Joined:Fri Oct 14, 2016 5:37 pm

Re: Changing property in a trust from deceased donor to beneficiaries property

Postby Cloisters » Tue Feb 13, 2024 11:34 am

Thank you. I hadn't appreciated the higher SDLT rate applied to Trusts. HMRC do make life complicated :)


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