Garland trust meaning

Private Client England & Wales glossary A Abatement When, after settling the deceased’s funeral costs, debts and liabilities, the remaining estate cannot satisfy all legacies in full, the gifts are reduced accordingly, unless the Will shows a different intention. In a solvent estate, the order for reduction appears in Part II of Schedule 1 to the Administration of Estates Act 1925. Refer to Practice Note: Payment of legacies. Accruals basis Where income is taxed on an accruals basis, it is attributed to a given tax year by reference to the number of days within that year during which the activity giving rise to the liability accrued. See Practice Note: What is the basis of income tax?. Accumulation and maintenance (A&M) trust A form of non‑interest in possession trust designed to benefit children and young people up to 25, which received favourable inheritance tax treatment between 1975 and 2006. See Practice Note: Accumulation and maintenance trusts—IHT [Archived]. Accredited Legal Representative (ALR) ...

The way a distribution from a trust is taxed in the hands of the recipient turns first on whether it is income or capital. Fixed interest trusts (life interest trusts) In a fixed interest trust, one or more of the beneficiaries are entitled to receive the trust’s income as of right for a specified period or term. Where the arrangement is a life interest trust, the beneficiary, or life tenant, enjoys an absolute entitlement to the trust’s underlying income; that entitlement is known as an interest in possession. By comparison, within a discretionary trust the trustees have the power to decide whether, when and how much income to distribute to the beneficiaries from time to time. These distinctions are significant because they point to the source from which the income arises in each case. Identifying the source is important because it fixes the tax character of any distribution made by the trust for the recipient. For a fixed interest trust, the source of the income is the income‑producing...