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Money received from a TRUST

Money received from a TRUST

I have a client who has received £52000 from a trust.

Property was gifted to the trust by his father about 20 years ago. The property has been rented out as a business and the rental income was set up to go to my clients mother. The property has now been sold and in accordance with the trust the proceeds has been split between the three sons.

Are there any Capiatal Gains implications for my client? I assume not
as the property was not owned by him, but one third of the proceeds gifted to him via the trust. I was not sure if he had to declare one third of any gain in value since the trust was set up.
Mark Gosling


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By wdr
03rd Mar 2004 15:33

If the trust was on shore, then any CGT liabilty lies with the
The answer would be different if the trust had been offshore.There is an unclear aspect. Has client's mother died, and was there any IHT payable on her death, on the basis that at the date of her death she had a life interest.She was then treated as having transferred the full value at death. Whether there was any IHT payable will depend on the value of her entire estate

If mother had been life tenant of a will trust where father died before 13November 1974[see IHTA sch 6 para2] there would be no IHT.

If mother has died otherwise, then of course the property was rebased for CGT to the value at the date of her death.

If mother is alive, and the trust deed provides that on sale the proceeds go to the remaindermen, that is a PET by mother, and the usual 7 year run off rules apply. On the basis of the figures, it looks as though client and his brothers-assumed equal beneficiaries-have in aggregate received les than the nil rate band for IHT so even on the assumption of this being a life time transaction , on mother's death within 7 years there should be no charge on them, but of course £156,000 will have been taken out of mother's nil rate band

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