Will trusts Flashcards
What is the relationship between wills and trusts?
Wills can create new trusts, and the will acts as the trust deed.
Who is the settlor in a will trust?
The testator.
What duties apply to trusts created by wills?
Trust rules and duties, and fiduciary duties.
What is a key characteristic of a Discretionary Will Trust?
There is no immediate tax saving for the testator.
Can a spouse exemption apply to a Discretionary Will Trust?
No, the spouse exemption cannot apply.
How do beneficiaries benefit from a Discretionary Will Trust?
Beneficiaries can benefit without accumulating wealth individually.
What happens to trust assets if a beneficiary of a discretionary trust dies?
Their taxable estate does not include trust assets.
What is a Discretionary Trust of Residue?
The whole or part of the residuary estate passes to a discretionary trust.
Can RNRB be claimed if the legacy is put into a discretionary trust?
No.
What advantages does a Discretionary Will Trust provide to a testator?
- It offers flexibility and protection.
- Trusts are taxed at a lower rate than individuals
What is a 2 year discretionary will trust?
- it is intended to last for the period of 2 years following the testator’s death
- distributions are deemed to have taken place under the deceased’s will for IHT purposes (not by the trustees)
- this allows greater flexibility - they do not need to have decided how to distribute the will when the will is drafted
How is a life interest will trust treated in relation to exempt beneficiaries?
- Spousal exemption can be claimed provided the testator’s spouse is the life tenant
- Sposual exemption can NOT be claimed if the spouse is the ultimate beenficiary
What control does the testator have in a Life Interest Will Trust?
The testator can control the ultimate destination of the estate.
What is a life tenant entitled to?
The life tenant is entitled only to trust income, not trust capital.
What rights do beneficiaries have in trusts of land?
Beneficiaries have a right to occupy unless excluded in the trust instrument.
What right do trustees have regarding the right to occupy land?
Trustees can control the right to occupy as long as they are not unreasonable.
What is required of trustees when making decisions about land?
Duties to consult beneficiaries each time decisions are made.
