Commentary

I5.1036 Trusts with vulnerable beneficiaries—qualifying trusts

IHT, trusts and estates

I5.1036 Trusts with vulnerable beneficiaries—qualifying trusts

I5.1036 Trusts with vulnerable beneficiaries—qualifying trusts

Qualifying trusts—introduction

The definition of a qualifying trust for the purposes of the vulnerable beneficiary provisions differs depending on whether the vulnerable beneficiary is a disabled person or a relevant minor (see I5.1035).

Qualifying trust for disabled persons

A trust for the benefit of a disabled person is a qualifying trust if it meets the following two conditions throughout the 'lifetime of the disabled person' or, if sooner, until the trust terminates1:

  1.  

    •     if the trust property is applied for the benefit of a beneficiary, it is applied for the benefit of the disabled person, and

  2.  

    •     either:

    1.  

      –     the disabled person is entitled to all the income (if there is any) arising from that property, or

    2.  

      –     (from 2013/14) if any such income is applied for the benefit of a beneficiary it is for the benefit of the disabled beneficiary

This means that where there is more than one beneficiary, the property held for the benefit of the disabled person must be held in a separate fund or in some other defined part of the settled property (see below)2.

These tests will not fail by reason only of a power of advancement conferred on the trustees to apply income or capital not exceeding the 'annual limit' to a non-disabled beneficiary3.

The annual limit is the lower of4:

  1.  

    •     £3,000, and

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial