Taxation of trusts—restructuring trusts
Taxation of trusts—restructuring trusts

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • Taxation of trusts—restructuring trusts
  • Reasons for restructuring a trust
  • Exercise of a power by the trustees
  • Court orders which vary beneficial interests in a trust
  • A disposition by a beneficiary of a trust interest

Reasons for restructuring a trust

Restructuring a trust may be undertaken for a number of purposes, including to:

  1. restrict the class of beneficiaries

  2. create specific trusts for specific beneficiaries or for a class of beneficiaries

  3. create a sub-fund or sub-funds

  4. appoint a different set of trustees over a part of the trust fund

  5. expand the administrative powers held by the trustees

A trust may be restructured by one or more of the following methods:

  1. an exercise by the trustees of a statutory power or of an express power contained in the trust deed or instrument

  2. an application to court for a variation of the terms of the trust

  3. a disposition by a beneficiary of a vested or contingent interest

Exercise of a power by the trustees

This is likely to be the simplest and most effective method of restructuring the trust because it can be achieved (if the terms of the trust allow) simply and quickly by the trustees and without the need for any action on the part of a beneficiary. The terms of the trust instrument (if any) and/or the terms imposed by statute should be examined to ascertain the extent of the flexibility which the trustees have to restructure the trust.

A modern trust instrument will confer a power of appointment on the trustees, which will commonly