Can a discretionary trust buy a property?

Can a discretionary trust buy a property?

A “discretionary” trust, which has traditionally been the most common type, allows the trustees to be in control of the trust’s assets – deciding when they are released. Unfortunately, this type of trust is always subject to the 3 percentage point stamp duty surcharge when used to purchase a property.

Can a discretionary trust hold assets?

A discretionary trust allows a person to hold onto their assets without being the legal owner of the property. This can have significant advantages. For example, if a creditor pursued a beneficiary’s assets, the trust property is generally protected because the trustee is the legal owner rather than the beneficiary.

Are discretionary trusts worthwhile?

Whereas the beneficiaries of a discretionary trust will only benefit from the trust income and assets at the trustee’s discretion. Whilst trusts can be useful for tax planning, they are also a very effective way of protecting family wealth for future generations.

What makes a trust a trust or a discretionary trust?

A trust is a relationship between a person or company (the trustee) that holds legal title to property for the benefit of others (the beneficiaries). With a discretionary trust, the trustee can exercise discretion as to which beneficiaries receive a distribution of income from the trust property.

How does a settlor work in a discretionary trust?

Quite often a settlor will also leave a “letter of wishes” setting out how they would like the trustees to exercise their powers. The trustees of a discretionary trust may, for example, be granted the power to decide how much income or capital is paid out, to whom and when. When are discretionary trusts used?

Who are the purchasers of a property in a trust?

However, where trustees are involved in a purchase transaction it becomes necessary to ascertain not only whether it is the trustees of the trust or the beneficiaries under the trust who are the purchasers but also who, following the purchase, is regarded as the owner of the purchased property.

Who are vulnerable beneficiaries of discretionary trust?

Such persons are referred to as “vulnerable beneficiaries”. Where trust property is sold, given away or disposed of and such property has gone up in value since being put into trust, Capital Gains Tax may be payable. It is the responsibility of the trustees to declare and pay any Capital Gains Tax due.

Previous Post Next Post