Transfer of assets to beneficiaries ― legal, administration and tax issues

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

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This guidance note outlines how assets are transferred to beneficiaries and the tax consequences that flow from the transfer. Whether a payment is income or capital is discussed in the Payments to trust beneficiaries guidance note.

This guidance note is designed to give outline and background for accountants and tax advisers who deal with clients establishing trusts. It is not targeted at lawyers.

This guidance note deals with the position in England and Wales only. See Simon’s Taxes I5.8 for details of the provisions affecting Scotland and Northern Ireland.

Three issues to consider when transferring assets to beneficiaries

Trustees may decide to exercise their powers by appointing assets to a beneficiary. There are three key issues that need to be considered when making or considering such a transfer:

•
how they must document the exercise of their powers
•
the formalities that should be complied with to transfer the asset
•
the tax consequences of the transfer

Documenting the exercise of the trustees’ powers

The

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Transfer of assets to beneficiaries ― legal, administration and tax issues

Transfer of assets to beneficiaries ― legal, administration and tax issues

Three issues to consider when transferring assets to beneficiaries