The following Trusts and Inheritance Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
In exercise of their dispositive powers, trustees transfer income and capital to beneficiaries. For commentary on the different types of payments, see the Payments to beneficiaries guidance note. Most often, particularly in the case of income distributions, the payments will be in cash. Occasionally, the distribution is in the form of non-cash assets.
Trustees need to be aware of the way in which such transfers are done:
The exercise of the trustees’ dispositive powers must comply with the terms of the trust deed from which the powers derive. So if the trust deed requires a particular power of appointment or advancement to be exercised by deed, then a deed must be used. If not, the exercise of the power will be void.
Equally, if the trustees require an indemnity on the distribution to protect them (should tax or other expenses arise), then the exercise of their dispositive powers should be made by deed.
Where a deed is not required, it will usually be sufficient for a trustees’ resolution to be completed to record the exercise of the trustees’ dispositive powers.
Even once the exercise of the trustees’ powers has been documented, certain additional formalities might need to be adhered to in order to
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