Who is the trustee of a discretionary trust?
Choosing the amount and frequency of payments. The trustee is typically given the discretionary power to choose when and how much money, if any, should be distributed among the beneficiaries. Who chooses the trustee of a discretionary trust?
What happens when a discretionary trust expires?
A date can be set for a discretionary trust to expire, usually written in the deed of the trust. This is often referred to as the vesting date. Who owns a discretionary trust? The appointed trustee owns the discretionary trust, but can’t benefit from it in any way — such as taking a loan out against the amount or withdrawing capital.
Can a capital gain be deferred to a discretionary trust?
If a settlor transfers assets to a discretionary trust, this is a chargeable transfer for these purposes. Therefore, capital gains arising on the gift of any asset to a discretionary trust will qualify for gift relief, and thus the gain can be deferred.
What is the IHT rate for a discretionary trust?
Gifts to discretionary trusts are an example of a chargeable lifetime transfer. IHT is currently payable at the rate of 40% on any chargeable transfer arising on death and at a reduced rate of 20% on chargeable lifetime transfers. There are, therefore, IHT implications to consider of gifting assets to discretionary trusts.
What kind of discretion do your trust have?
There are limitations on the trustee’s absolute discretion imposed by the law. The trustee cannot act arbitrarily or capriciously, meaning without reason or foundation in fact. The trustee cannot act dishonestly. The trustee cannot act with some mindset other than one that looks to accomplish the purposes of the trust.
What happens when the grantor of a trust dies?
Trust administration is the process that begins when the grantor dies and the trustee must manage/distribute trust property accordingly. The trustee needs to collect trust assets, beneficiary information, pay debts, pay individual and/or estate taxes, and possibly ready assets such as a home for sale.
What are the guidelines for serving as a trustee?
If you’ve been named to serve as trustee, these guidelines provide an overview of some of the duties you would generally be expected to perform. You can also use these guidelines to determine if you don’t have the skill, will, or time to administer the trust properly.
Can a trustee obtain a consent from a beneficiary?
The consent must not be improperly induced and the beneficiary must know of the beneficiary’s rights. If a trustee is concerned about the trust investment or an underperforming asset held by the trust, he can obtain consents from the beneficiaries to relieve him from personal liability. In order for a consent to be valid, however]