Postby marc02 » Thu Apr 27, 2017 2:26 pm
It is predominantly a dual objective (a) to mitigate the 10 year charge if possible and (b) to retain control of the Trust Fund for the benefit of the current named beneficiaries (c) keeping the Trust Fund in a wrapper to protect it and maintain flexibility by the Trustees as to how the fund is used.
It seems from above the fund going out of Trust and into a New Trust in the way described is ok, although a CLT is created.
However, although the New Trust (as is the old one) would be written as a DISCRETIONARY TRUST the reservation of benefit becomes an issue that did not exist before when the settlors were not the Trustees or beneficiaries. Have I understood that right?
(1) To remove this problem I suppose the Trustees could be another person, but if this was done, could the Trust give significant Powers to a Trust Protector (who is the settlor and beneficiary) ie: any use of the Trust Fund or benefits distributed must have the consent of the Trust Protector - or would this be the same reservation of benefit just written differently?
(2) ALTERNATIVELY, the beneficiaries could be named broader eg; rather than naming the beneficiary stating "the spouse, children of X" - since it is a discretionary trust "X" could still benefit if "X" who was also the Trustee decided.