Trusts and Inheritance Tax

Resettlements and variations

Produced by Tolley
  • 23 Mar 2022 10:43

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Resettlements and variations
  • Meaning of resettlement, variation and partition
  • Resettlements by trustees
  • Resettlement by trustees ― replacement of existing trusts
  • Resettlement by trustees ― transfer to existing settlement
  • Resettlements by beneficiaries
  • General powers of appointment
  • Special powers of appointment
  • Tax implications of resettlements
  • Variations
  • More...

Resettlements and variations

Meaning of resettlement, variation and partition

The trustees or the beneficiaries of a trust may wish to change the way in which the trust operates; or they may wish to hold or allocate trust property under different terms. This guidance note and the Partitioning trust funds guidance note examine how the change can be achieved.

There is a degree of overlap between the terms used and there are no clear definitions.

In this guidance note, the term ‘resettlement’ refers to a transfer of trust assets from one trust to another. The trustees of each trust may be the same or different, and the ‘transfer’ may be merely notional in that legal ownership does not change. However, the key features are that:

  1. new trusts are declared over the trust property with the result that its use or application is modified, and

  2. it is brought about by the exercise of existing powers

A typical example of resettlement is where the trustees wish to postpone the date on which a beneficiary is to become absolutely entitled to trust assets because of immaturity or vulnerability.

The Partitioning trust funds guidance note examines the situation where beneficiaries wish to distribute or resettle trust assets. This may be because the rationale for the trust has changed or perhaps because there is disagreement over how the trust should be managed.

Therefore, resettlement and partition both refer to the creation of new trusts. Resettlement is carried out under the trustees’ existing powers but partition is brought about by the beneficiaries.

The

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.

TAKE A FREE TRIAL

Popular Articles

Deferral of capital gains via reinvestment

Why defer a gain?An individual’s net taxable income and chargeable gains for the tax year influence the rate of tax payable on their capital gains. See the Introduction to capital gains tax guidance note.Depending on the nature of the asset disposed of, this can result in the individual paying

22 Mar 2022 09:47 | Produced by Tolley Read more Read more

Loans written off

Companies sometimes provide directors, employees or shareholders with low interest (or interest-free) loans either as part of the reward package or on special occasions to help the individual meet significant expenditure. The employment income implications of these loans are discussed in detail in

22 Mar 2022 12:26 | Produced by Tolley Read more Read more

Repayment of tax ― individuals

If the self assessment tax return shows that a repayment is due, the taxpayer can claim a repayment or leave it as a credit on their statement of account.The quickest and safest method is for HMRC to make the payment direct to the taxpayer’s bank or building society account and so they are asked to

22 Mar 2022 09:44 | Produced by Tolley Read more Read more