Interest in Possession and Equalisation

Interest in Possession and Equalisation

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My client has an interest in possession trust and is subsequently entitled to all the income generated by the trust. However, the trustees have paid over the equalisation payments, which are capital in nature, to my client. How should my client treat these payments? Should they be paid back to the trust? Thanks
Lina Bolton

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By User deleted
14th Dec 2006 10:33

Depends on the trustees and their powers
Why am I still continuing to be surprised at the ignorance of many trustees and their seeming inability to ask someone who knows for advice? I totally agree equalisation is capital, not income, but the beneficiary will not need to kick back if the trustees resolve that the extra payments in question are to be treated as loans or advances of capital. Naturally, the trust deed will need to be examined to determine whether one or both of these powers has been granted to the trustees.

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