Q&As

A disabled person’s trust was set up after 8 April 2013, but the trust documentation refers to the pre-2013 rules requiring half of the trust capital applied during the disabled person’s lifetime to be applied for their benefit. Which rules will apply and what options are available to the trustees to rectify the position if the current rules are preferred?

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Published on LexisPSL on 17/12/2020

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • A disabled person’s trust was set up after 8 April 2013, but the trust documentation refers to the pre-2013 rules requiring half of the trust capital applied during the disabled person’s lifetime to be applied for their benefit. Which rules will apply and what options are available to the trustees to rectify the position if the current rules are preferred?

Following the Finance Act 2006, disabled person trusts can be established both as discretionary trusts and as life interest trusts. These trusts can be set up by anybody, including the disabled person themselves where they qualify as a ‘disabled person’. For information on who qualifies as a disabled person, see Practice Note: Taxation of trusts for disabled persons—IHT and sections 89, 89A and 89B of the Inheritance Tax Act 1984 (IHTA 1984).

Following amendments made to IHTA 1984 by section 216 and Schedule 44 to the Finance Act 2013, for all trusts established on or after 8 April 2013, the requirement that the trusts secure that half of any settled property applied during the life of the dis

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