Family Trust

[chrissa1]

My daughter’s MIL has placed £50K in a trust for her son and daughter to help with Inheritance Tax.

My daughter is pregnant with twins and has had to go in sick leave and Mat Pay,
early. They could really do with being able to access their share of the money, now.

The sister doesn’t need to access the money at all in the next few years. Would there be a penalty if my daughter and SIL took some money now. IE 5% or something like that.

I don’t know what sort of Trust it is.

Any advice would be gratefully accepted.

[woofgang]

you'd need to know more than this to know if its even possible to take money out early.

[chrissa1]

No. I don’t know anymore details. Thanks anyway.

[Maydup]

If its been descibed as a trust to help with inheritance tax, the release of funds is likely to be linked with the death of the MIL.

Eitherway, its impossible really for anyone other than MIL or maybe your daughter, to guess the terms.

[Peter Pedant]

Barmaid is a barrister who specialises in this sort of stuff

I dont know what sort of trust it is either. wills trusts have complex tax rules and still count as part of the settlors estate for IHT purposes - so they dont really save tax

or as Justice Hoo-Ja said a few years ago - wills trusts as vehicles for saving tax have really had their day

The rich MIL MUST have had advice for this - you dont buy a trust like a box of cornflakes. No lawyer will say - "we will set up a trust for you ma'am at great expense and it will be totally crap."

The POINT of a trust by the way is stop the lucky beneficiaries getting their hot little hands on the moolah before the settlor barks 'snouts in the trough!'

the MIL must have told the two beneficiaries what the conditions - but if they are anything like my relations, they dont listen and make it all up anyway ....

"I want my share and I want it now! " is a frequently heard phrase even from the lips of those who are not beneficiaries

[Peter Pedant]

// Would there be a penalty if my daughter and SIL took some money now. IE 5% or something like that. //

trusts dont work like that

instead of your d asking you - yr son in law should be asking his indulgent mama. God knows what the answer is - including, o there is no trust, I was just thinking aloud .....

[Peter Pedant]

oh I see - trust fund 100k say
and you take 25k now
what adjustment do you make for this, at the final division ?

with a lot of blood on the carpet is that answer .....
yeah kitchen knives drawn on the front lawn .....only one walks away ....

[Peter Pedant]

hi chrissa
I was the lucky beneficiary of a discretionary trust
and had a lot of trouble from interests in possession
and ... IRC v Pearson. - taxation of trusts
so I know MUCH more about this than you think .....

[chrissa1]

Then enlighten me.

[ladybirder]

Chrissa I would think the trust has been set up in such a way that the money can be used only for the purpose for which it was meant. That's what they are for. I would be very surprised to learn that the money could be accessed now. But what do I know, we need Barmaid to see this.

[chrissa1]

Ok ladybirder. Thanks.

[fiction-factory]

As it seems the trust fund can't be touched at this stage there are some alternatives- if MIL can afford to give some money now which falls within the IHT gift allowances or lend some money (say with very long repayment period and little or no interest) now that could be done; or if the son could lend some on the basis that it will be repid from the trust fund in future years that might help.