From Trust and Estate Practitioner Brona MacDougall
I have had a lot of interest recently from clients and potential clients who are looking to wind up trusts of which they are beneficiaries. But what are the legal and tax implications of doing so?
In some cases, these trusts were set up on death by parents looking to protect beneficiaries who no longer need protection. But in other cases, they were established in life based on poor advice and an industry created to profit from people’s fear of incurring care home fees. Whatever the provenance of these trusts, they can end up not serving the needs of the beneficiaries (or settlors) and the legal and tax implications of winding them up can be complex and expensive.
A trust itself does not have to be a scary or complex thing – it is just a vessel for an investment. If you are considering the value of maintaining a trust that you have an interest in, then you need to ask yourself three questions:
- Are you happy with the control of the trust?
- Are you happy with the fees charged within the structure?
- Are you happy with the performance of the investment?
If the answer to any of these questions is ‘no’, that does not mean that the trust needs to be wound up – it could just mean that changes are required.
Remember that the beneficiaries of a trust have rights as against the trustees – you are not powerless. Don’t feel scared to question the trustees and review the benefit of the structure for yourself and others.
The recent news relating to Family Protection Trusts drawn up by McClure’s solicitors brought this issue into sharp focus for me recently. Whether or not these trusts were well drawn up or well administered is not for me to determine, but I believe the fall out is illustrative of the fact that the public will often place unwarranted reliance on the advice of highly educated and well credentialled people that are not necessarily operating in their best interests.
JRW have acted as professional trustee for many trusts in our hundred years, we are qualified trust and estate practitioners and are currently engaged in winding up, reviewing and restructuring a variety of trusts to ensure that the benefits of the trust are maximised for the beneficiaries, rather than those in charge of funds.
If you are looking for clarity on your own trust situation or need some honest and straight-forward advice please email me
CA, TEP (Trust and Estate Practitioner), CTA (Chartered Tax Advisor)