Establishing a discretionary trust with an outstanding loan

[tax_schmax]

F would like to establish a discretionary trust, with an outstanding loan as the sole trust asset. A few years ago, to help their daughter buy their first home,, F gave some money some money and the remainder was lent (secured with a legal charge). F is now starting to make provision to keep money within the family. The first idea was to give the outstanding loan to trustees, to stop the outstanding loan being included in the estate at death, and to protect the (currently single) offspring from some of the financial impacts of a bad relationship. Is it possible to value a debt between family at face value? Will the agreement have to be redrafted before it is given to the trustees, or can this be done once the trustees receive the asset? Any pointers greatly appreciated.

[AnthonyR]

In theory the loan is an asset of F and generally debts can be transferred without a charge to CGT (they are considered CGT free in the hands of the original lender).

However, does the loan agreement (if such a thing exists) allow for it to be transferred?

If there is no formal loan agreement, it should probably be formalised (including a right of assignment) and then assigned via deed to the trust.

If I remember rightly there are some formalities for an assigned debt to be enforced without the assistance of the original lender so just keep an eye on that if he's not the trustee.

[tax_schmax]

Thanks for your answer. I had thought it through, but had totally overloooked the last point.