Is it possible to break a trust?

silvercar

Trying to help someone out.

The deceased has left a pot of money in trust. The stipulation made in the will is that the amount is held for the named offspring of X, but X gets the benefit of the money during their lifetime.

X has no need for the benefit of the money (I assume this means interest/ dividends etc) and would like to forego this money in order that the offspring could use this money now eg for a deposit on a property. Is this possible? Offspring is over 18 if that is significant.

Thanks for any insights.

getmore4less

"ending a interest in possession trust early"

will find references you need

Relatively simple process but needs the tax situation checking.

If less than two years then a DOV probably could be used to avoid the trust completely again the tax implications needed assessing especially if X was a spouse/civil partner of the testator as a DOV effects the transferable nil rate band.

silvercar

getmore4less wrote: »

"ending a interest in possession trust early"

will find references you need

Relatively simple process but needs the tax situation checking.

If less than two years then a DOV probably could be used to avoid the trust completely again the tax implications needed assessing especially if X was a spouse/civil partner of the testator as a DOV effects the transferable nil rate band.

Too late for a DOV.

What are the tax implications? X and their offspring are tax payers.

Yorkshireman99

silvercar wrote: »

Too late for a DOV.

What are the tax implications? X and their offspring are tax payers.

Without seeing the details of the trust nobody on here can give definite advice. The parties need to consult a specialist I.e. a STEP member. They will be able to advise on the various options.

getmore4less

silvercar wrote: »

Too late for a DOV.

What are the tax implications? X and their offspring are tax payers.

You will have to research

these questions are better posed on the tax board that's where those with current knowledge and experience tend to hang out.

for will based IIP trusts they can be straightforward.

typically for a qualifying IIP that forms part of the life tenants estate it becomes PET, with the usual 7 year rules.

There is also the issue of disposal and CGT which don't apply when the life tenant dies.

silvercar

Accept that there may be tax considerations.

Good to know it can be done. Basically the deceased was trying to protect inheritance for the benefit of future generations. So left money to grand children in trust with their parents (his own children) to have the benefit of the interest of the trust.

Really he didn't think it through, because had he been alive and wanted to distribute part of his estate prior to his death, he would have been happy for the parent to agree that the grand children to be able to use the money for house deposits.

The way the trust was set up, the money has to remain in the trust for the benefit of it for the parent.

Yorkshireman99

silvercar wrote: »

Accept that there may be tax considerations.

Good to know it can be done. Basically the deceased was trying to protect inheritance for the benefit of future generations. So left money to grand children in trust with their parents (his own children) to have the benefit of the interest of the trust.

Really he didn't think it through, because had he been alive and wanted to distribute part of his estate prior to his death, he would have been happy for the parent to agree that the grand children to be able to use the money for house deposits.

The way the trust was set up, the money has to remain in the trust for the benefit of it for the parent.

It is all theoretical without seeing the exact terms of the trust. Beware those who think it is a situation that you can DIY. Paid for professional advice is likely to cost leass than the saving.