two deeds of variation

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Someone inherits £60k; he would like to put it into a discretionary trust by DoV but understands that the amount is probably too small to make a trust economic. Then, within two years, he inherits a further £90k. (i) Is he permitted to use a DoV on each inheritance, directing both sums to the same, new, discretionary trust? (ii) Is it realistic to assume that the running costs of the trust can easily be borne by a total of £150k of capital, or is even that too small?

[Lee Young]

One can only do one DOV in relation to the same asset. Therefore if the first DOV referred specifically to a discrete £60K, then another DOV in relation to the £90k is possible. If the first DOV defined the settled amount as effectively "everything I have received from the estate of the late..." then the second payment, assuming from the same estate, is already covered. If the second payment is form another estate then a new DOV would be needed.

Whether the trust fund is economical depends on the costs of the people running it and what you want to do with the money and the tax savings it otherwise represents.

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Thank you for your reply. Is it a fair summary to say that one could DoV £60k from Uncle Bob's estate, and later £90k from Aunt Mabel's, into the same discretionary trust?

Need the two DoVs be executed within two years of Bob's death? Would it work if one DoV'd the money from Bob's estate within two years of his death, and then, after however long a delay, DoV'd the money from Mabel within two years of her death?

Is there any useful rule of thumb, however approximate, about the economic size of a discretionary trust's capital?

[Lee Young]

Deeds of variation, to have the beneficial tax treatment, must be done within two years of the death of the deceased, the distribution of whose estate you are seeking to vary.

I would not use the same trust to receive the two distributions.

No rule of thumb - whatever economically you are content to pay out bearing in mind the size of the fund.

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Thank you again.

"I would not use the same trust to receive the two distributions": can you summarise why?

[Lee Young]

If there are two deceased persons whose estates are varied then there would two lots of income tax and capital gains tax allowances going forward, whereas with one trust there would only be one set.

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Many thanks.