Booklet: Controlling a Family Trust When You Die (Chapter 3 – Distributing assets from the trust on your death)

Controlling a family trust when you die

Below is Chapter 3 of our ‘Controlling a Family Trust When You Die’ booklet. To read the other chapters of our booklet, click the links below:

Distributing assets from the trust on your death

One simple solution would be to exercise your control over the trust’s assets before you die to require the trustee to distribute a fixed interest in the trust assets to your children following your death.

Controlling a family trust when you die booklet diagram

Distributing the assets to your children will trigger a ‘disposal’ of those assets by the trust to your children, and this is likely to have significant tax consequences. In particular, it is likely to trigger potential (and likely significant) income tax and capital gains tax on the trust’s assets. There may also be stamp duty consequences. Depending on how this is done, you could actually trigger the adverse tax consequences when you are still alive, i.e. now, rather than when you die.

Furthermore, the assets will no longer benefit from being held in the trust.

In short, unless you want to bring the trust to an end when you die, pay any accrued tax, and distribute the actual assets to your family, then this is not a practical strategy.

To download a PDF of our booklet, enter your email below.

 

The information contained in this post is current at the date of editing – 3 April 2024.

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