splitting discretionary trust into 2 Trusts ?

[worden]

Hello seeking help please.

Is it possible to split a discretionary Trust ( asset being a property, no income no outgoings )) into 2 Discretionary trusts ? We have a 10 year anniversary looming and wondering rather than paying the periodic Charge as Trust is well over NRB, if it would be possible to do this. There are a number of Trustees and Beneficiaries and would be more manageable in terms of each family sorting out their affairs in doing so also. This would leave the two trusts below the IHT and would then exempt them from charge ? alternatively giving half the asset directly to some of the beneficiaries and leaving the other half in Trust .?

Thank you anyone ?

[AGoodman]

1. Yes it's possible.
2. No it wouldn't work (they would be treated as the same settlement for IHT purposes)
3. A pre-10 year distribution might help but the distributions would be taken into account in the anniversary calculations. Somebody would need to work it through as I can't recall how this would work out.

[worden]

thank you Goodman --- so is this just proportionate to when it was given ? thank you for taking time to answer

[worden]

further to this, if u would be so kind to confirm ANYONE !

as this is the first 10 year anniversary looming, if any assets distributed to the beneficiaries, in this case a part share of a house -- there would be no exit charges i.e no capital gains.?? TO PAY

THANK YOU !

[AGoodman]

If the assets were within the nil rate band when they went in then there is usually no exit charge on capital distributions prior to the 1st 10 year anniversary.

However, if some assets remain in the trust, those earlier distributions may be taken into account when calculating the charge on the anniversary.

Exit charge is IHT, not CGT.

There could also be CGT if assets are distributed (i.e. other than cash) and they are standing at a gain. It is likely that holdover relief could be claimed under s.260 TCGA to holdover the gain to the recipient.

You should get some proper advice on this because there are lots of factors to consider.

[worden]

Thank you Goodman for your helpful reply.

Can i just clarify when you say "those earlier distributions MAY be taken into account " do you mean WILL , or is it dependant on anything ?

again thank you

[AGoodman]

It means I'm not sure and it will take too long to work through and work it out

[worden]

Fair enough ! thank you for replying none the less !