Discretionary Trust: TAX question

Discussion in 'Tax' started by On a Plain, Dec 28, 2016.

  1. On a Plain

    On a Plain New Member

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    A bit complex maybe!
    A discretionary trust (in a house and some land) was set up in a will made by my grandfather some 20 years ago. The trustee was my uncle who was not a beneficiary. The trust named my mother as a life beneficiary and myself and my brother as residuary devisee and legatees.
    Anyway, my grandfather died and probate was taken out by my uncle and granted. My mother continued to live in the house as always as did we. A couple of years ago my uncle passed away. Nothing was ever done regarding the ownership of the property, title still remains in my grandads name, and no trust tax was ever paid. I am wondering now, how this would be treated by the revenue. Ownership has to pass on at some stage and at what point in time would the inheritance tax be liable from ?
     
  2. Joe_90

    Joe_90 Frequent Poster

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    First thing to establish is do you have a discretionary trust or was your monther given a life interest in the property?

    So your grandfather left it to you but you had to let your mother live in it.

    What age were you when your grandfather died?
     
  3. PMU

    PMU Frequent Poster

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    Last edited: Dec 29, 2016
    The Revenue Commissioners' Capital Acquisitions Tax Manual - Part 5 Discretionary Trust Tax (available on Revenue's web site) tells you all you need to know about discretionary trust tax. If you send the relevant section of your late grandfather's will to Revenue's Capital Acquisitions Tax Unit, Athy, Co. Kildare, they will tell you if a discretionary trust exists and what the tax obligations are. You could also ask your solicitor for an opinion but, in my experience, Revenue is the deciding authority on whether a discretionary trust exists or not.
     
    Last edited: Dec 29, 2016
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  4. On a Plain

    On a Plain New Member

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    I checked the will and it is certainly a discretionary trust, the word life is not mentioned. Basically it says the property is in trust for my mother, at the absolute discretion of my uncle, with the residue to myself and my brother
    I was about ten when the will was made. I was 20 when my grandfather died. I am almost 40 now
     
  5. Sophrosyne

    Sophrosyne Frequent Poster

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    Under the Succession Act 1965 s 10(5), your uncle’s personal representative(s) should hold the trust property until a new trustee is appointed.
     
  6. On a Plain

    On a Plain New Member

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    Thanks. Does this mean my uncles executors now control the trust ?
    How can a new trustee be appointed when the grantor is deceased, would this be done by a court order ?
     
  7. On a Plain

    On a Plain New Member

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    I got a look at the grant of probate taken out after my grandfathers death.

    It is stamped on the bottom "Certificate issued by the Revenue Commissioners that the payment of inheritance tax has been deferred"