Don't Ignore a Will Trust

We often see clients come to us when the second of their parents pass away. On occasions, it transpires that a trust was established under the Will of the first parent to die.

Often, either because of the mention of a surviving spouse within that trust, or because the wording of the trust is misunderstood, we find that no action had been taken to administer that trust as the assumption is that the surviving parent 'inherits'.

There are many reasons why a trust might be created under a Will. It may be that it is a trust that would have been used to deal with tax planning prior to the ability to transfer spouses' inheritance tax allowances that came into force in 2007, or it might be that the trust was intended to allow protection against care fees.

Either way, if the trust was not properly administered at the time the first parent died, it can leave more to do when the surviving parent passes away.

It is much more difficult to assess what assets fell into a persons' estate, and into the Will Trust, when time has passed. Often records with banks will have been destroyed, and it may be hard to obtain details from HMRC on the assets and tax position of the first to die. This can cause additional costs and time to assess what should have happened and what did happen.

Trusts within Wills simply can't be ignored, and with the more recent requirement to register such trusts with HMRC, it is all the more important for clients to be aware of what is involved.  

With many of these trusts, there will be the need to submit paperwork to HMRC, to deal with bringing that trust to an end and to consider the possible tax position for inheritance tax, capital gains tax and income tax.

Get in touch

If you are unsure what a Will contains, or there is mention within the Will of a 'trust' then do get in touch with our specialist Trust Team.

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