Legal Q&A

The investment powers and duties of bare trustees It is sometimes unclear precisely where the investment powers and responsibilities of bare trustees begin and end. A bare trust arises when a trustee owns assets for a beneficiary who is of full age and has mental capacity. In strict terms, the trustee’s role is passive: to safeguard trust assets and pass them to the beneficiary as and when instructed. Yet, in reality, a trustee may agree to take on tasks beyond this remit, particularly if the trustee is a close relative of the beneficiary......

When is grossing up required? For guidance on when grossing-up is needed, see Practice Note: Grossing up and partly exempt estates, particularly the section entitled ' When is grossing up required?'. Note that on death, if the residuary estate passes wholly to non-exempt beneficiaries, grossing up does not arise, whether or not any specific legacy is tax-free or chargeable. Where a specific legacy is tax-free, the nominated sum or item is delivered as given and the relevant IHT is paid from the estate in the usual manner; the residuary estate is then calculated. If grossing up applies and the combined amount of all specific gifts (both chargeable and exempt) exceeds the value transferred, i.e. the free estate for IHT, section 37(2) of the Inheritance Tax Act 1984 operates to reduce specific gifts so far as required to bring them down to the value...

Sale by PRs or appropriation to beneficiaries We understand you are asking when it is better for the personal representatives ( PRs) to dispose of an estate property, or instead to appropriate it to the beneficiaries so that they handle the sale themselves. This choice typically arises where: the beneficiary(ies) has/have part or all of their capital gains tax ( CGT) annual exemption available the beneficiary(ies) will pay CGT at 18% on any part of a gain the beneficiary(ies) has/have losses available to offset against any gain the sale will make a loss and the PRs will not be making any further disposals that may produce gains to utilise the loss A death is not usually a chargeable occasion for CGT. For these purposes the PRs are treated as acquiring the assets at market value on the date of death; effectively, all prior accrued gains are...

Various statutes govern the exercise of trustee powers. A range of statutes regulates how trustee powers are exercised. For the purposes of this response, it is taken that the trust contains no special or unusual terms or purposes. In those circumstances, the Trustee Act 1925 ( TA 1925) and the Trustee Act 2000 ( Tr A 2000) are likely to be the principal statutory frameworks. As a general rule, there will be no more than four trustees ( TA 1925, s 34), and trustees are under a duty to reach decisions that accord with the trust’s purposes and powers. They must act in good faith and eschew conflicts of interest. Decisions should be taken on an informed footing, and the usual position for private trusts (as opposed to, for instance, charitable trusts) is that trustees are required to act unanimously rather than by...

How should the trustees report the amount of the debt for the purposes of IHT ten-year charge? Should they include any index-linked element of the debt? We have found no authority directly answering this. The principal, or ten‑year, charge is imposed on the value of relevant property held by the trustees immediately before the ten‑year anniversary ( TYA). See Practice Note: Relevant property trusts—the principal (ten‑year) charge. Where the trustees’ asset is encumbered by a charge with an index‑linked feature, the trust fund must be valued correctly just before the TYA. That exercise turns on the precise balance outstanding at that point and on whether the index‑linkage ought to be reflected, notwithstanding it would only bite once the loan is redeemed. As a broad rule, where property is charged, the amount secured is deductible from the property’s value when computing the IHT charge...

For this Q& A, it is taken that, during their joint lifetimes, both spouses were the registered legal owners. Following the first death, the surviving spouse became the legal title holder on trust, holding one half share for the late spouse and the other half share for themselves under that trust. By executing a deed of variation, the survivor then came to hold the legal title on trust so that a 50% beneficial share belonged to the deceased’s children, with the balance 50% beneficial share remaining with the survivor as their own interest. Only equitable beneficial interests can be severed. A legal estate can only subsist as a joint tenancy, pursuant to section 36(2) of the Law of Property Act 1925 ( LPA 1925)......

We proceed on the basis that the default legacy will take the form of a discretionary trust in favour of the testator’s grandchildren and does not create an immediate post-death interest ( IPDI) trust under section 49A of the Inheritance Tax Act 1984 ( IHTA 1984). We further assume that it is not a disabled trust within IHTA 1984, s 89......

Beneficiaries of an estate are not entitled to any distribution whilst the estate remains under administration at present...

Personal representatives ( PRs) of an estate bear personal responsibility, limited to the estate’s value, for debts arising from the deceased. This responsibility extends to contingent obligations as well, even where no demand or claim has as yet been submitted......

Based on our understanding, there are no specific rules regarding the way multiple mobile home owners must record their respective ownership shares formally......

Acquisition or appropriation of remainderman's interest Under a life interest trust, the life tenant is entitled to live in the property or take the income it produces. The scenario assumes the life tenant might acquire the remainderman’s interest in the property, thereby converting their position into an absolute interest. In such a case, the remainderman would receive cash in exchange for their reversionary interest. Where the Will trust does not confer an express power on trustees to reallocate or modify beneficial interests, the life tenant and the remainderman may agree a variation pursuant to the rule in Saunders v Vautier, so long as they are both of full age and have capacity. This route is unavailable if any minors or unborn persons have, or may have, an interest under the trust. If there are potential beneficiaries of that kind, an...

For this Q& A, it is taken that the property serves as the principal private residence of the life tenant within the trust arrangement. Principal private residence relief The trustees and the life tenant alike might qualify to claim principal private residence ( PPR) relief on gains realised from the eventual sale of the property concerned......

An unincorporated charity lacks its own separate legal personality and, in practical and legal terms, does not exist as a distinct body that can enter contracts or own property. Consequently, any property is held and any legal dealings are undertaken solely through, and in the names of, its trustees. Under section 117 of the Charities Act 2011 ( CA 2011), ‘charity trustees’ are those who exercise overall control and manage the charity’s administration. Trustees of a charity ought to be recorded with the Charities Commission; however, this does not invariably happen, particularly in the case of smaller charities operating with a rotating board. The identity of the trustees will ordinarily be established by reference to the charity’s charitable articles......

Amendments to the International Tax Compliance Regulations 2015 (2015 regs), SI 2015/878, introduced by the International Tax Compliance ( Amendment) Regulations 2025, SI 2025/740, have brought in a compulsory Automatic Exchange of Information ( AEOI) registration obligation for certain trusts treated as ‘specified non-reporting financial institutions’. Under the 2015 regs, SI 2015/878, reg 24(1), a specified non-reporting financial institution is ‘a non-reporting financial institution which is a trust within the meaning of Section VIII( B)(1)(e) of the CRS or paragraph II( D) of Annex II to the FATCA agreement’. Set out below is a concise overview of the components of that definition. Financial institution ( IEIM400610) The FATCA and CRS frameworks recognise four common categories of Financial Institution: custodial institution depository institution investment entity specified insurance company Where a private trust satisfies any Financial Institution definition, it will most commonly be treated as an...

Where H died with a domicile outside England and Wales, the South African grant might be capable of being resealed in England and Wales so that H’s UK property can be dealt with without making a fresh application for a grant; see Practice Note: Resealing of foreign grants, for further reference. By contrast, if H was domiciled in England and Wales at death, an application for letters of administration will be required here, since the power to administer an estate in England and Wales rests on holding a grant of representation, accordingly. Anyone who, under the Non- Contentious Probate Rules 1987 ( NCPR 1987), SI 1987/2024, has priority to a grant may apply for a grant of letters of administration. The ranking of entitlement mirrors the order applicable on intestacy and is prescribed in NCPR 1987, SI 1987/2024, r 22......

On the life tenant’s death, an inheritance tax ( IHT) liability would arise pursuant to section 49 of the Inheritance Tax Act 1984 ( IHTA 1984), subject to any property that was eligible for relief at that time......

Mental incapacity of executor Mental capacity may justify excluding an executor from probate (see Evans v Tyler (1849) 163 ER 1266 at [131] (not reported on Lexis Nexis®)). The position for a sole executor who is incapacitated is governed by the Non- Contentious Probate Rules 1987 ( NCPR 1987), SI 1987/2024, r 35... Under the NCPR 1987, SI 1987/2024, the usual course is for the district judge or the registrar to issue a grant of administration (formerly termed a ‘durante dementia’) for the use and benefit of A, to continue until further representation is granted or otherwise as the district judge or registrar directs. See also NCPR 1987, SI 1987/2024, r 31... Further, r 35(2) of the NCPR 1987, SI 1987/2024, prescribes the order of priority for a grant where the executor lacks mental capacity......

The matter may not be as simple as obtaining some external quotes. Your starting point ought to be the charity’s constitution; check it first. If that document prohibits paying charity trustees under its terms, remunerating a trustee to undertake the restoration work may not be permitted at all......

Registration at the Charity Commission ( CC) Most entities with a charitable character must register with the Charity Commission ( CC), though some are exempt in specific cases. For further detailed guidance, see Practice Notes: Charity creation—legal points at Charity creation—legal points— Charity registration and Charity registration—when to register......

This Q& A assumes that the trust corporation is a company incorporated and registered in the UK under the Companies Act 2006 ( CA 2006) CA 2006 sets the framework for how a company formed under that Act allots and issues its shares. The exact process varies by the nature of the company proposing the allotment and factors such as whether it has a single share class or several classes already in issue. For further detail, see the sub-topic: Allotment, issue and pre-emption—overview, with particular reference to the Practice Note: Allotment and issue of shares—introductory points. For guidance on the consequences of breaching the CA 2006 provisions on allotting and issuing shares, consult Practice Note: Allotment and issue of shares—penalties......