Breaking a Reserved Property Trust to save tax

Anthear

I wondered if anyone can help....

My children are beneficiaries of 2 reserved property trusts created by a Will. As they are under 18 and do not earn, they are not utilising their personal tax allowance and as it stands, the Trusts are not tax efficient.

If these Trusts were to be broken and the money put into a 'Bare Trust' instead, what would be a reasonable amount to pay for the legal fees to undertake this work?

Clearly there has to be an advantage to the Trust to take this course of action. For one child the Trust has 10 years to run, for the other child 14 years.

Many thanks

xylophone

Professional fees vary enormously.

These are high value assets within a trust created for minor children.

In such a case it may well not be possible to make any variations without an application to the courts.

The type of trust is not clear from your post but it is not impossible for a property held in trust for a minor already to be a bare trust.





You need to take expert advice from a solicitor experienced and qualified in the law and practice in wills and trusts and probably from an accountant expert in trust taxation.

As to what is reasonable, how long is a piece of string......

Anthear

Hi - thanks for your reply..... I have consulted a tax/trusts accountant who referred it onto a Solicitor who specialises in Trusts, who said that it was a 'Reserved Property Trust'.

The asset is cash. I know it's a 'how long is a piece of string' question, but my issue is that the professional fees charged to change the Trust could wipe out the interest/capital growth of the Trust for a good few years, so need to be making sure the decision made is a 'good' one for the circumstances.

Thanks

Cliveman_Pieman

I can recommend a STEP solicitor. Very reputable. About 450 an hour for Partner time, down to about 200 (I think) for trainee time. Plus VAT and disbursements. So it ain't cheap. As for how many hours...
How long is a piece of string!

Anthear

DUH - my mistake - it's a RELEVANT Property Trust - this looks like a form of Discretionary Trust???

xylophone

http://www.herrington-carmichael.com/Documents/Articles/a459aa0d-4039-4bd0-ae9b-0fbbcf121f70.pdf

What powers are the Trustees given in the Trust Deed?

If it is possible to make distributions to the beneficiaries, see here

https://www.blakemorgan.co.uk/training-knowledge/guides/client-guide-discretionary-trusts/

If the minor children are non-tax payers, the Trustees would make a payment to them on which tax paid by the Trust could be reclaimed on their behalf.

Such distributions might be paid into their JISAs and invested within them.

Payments could also be invested outside JISA into investments/accounts which would be held in bare trust.

If substantial sums are involved find an expert.
http://www.critchleys.co.uk/private-client/trusts