Frequently Asked questions about Family Trusts

Who is responsible for the tax payable on the trust?

In general, the trustees are responsible for ensuring that any tax due on the trust is paid. This can be paid from the trust fund itself. However, for trusts which are set up for minors, any income tax can be payable by the settlor. This can vary depending on the type of trust and the beneficiaries stated in the deed. Legal advice should be sought before proceeding with any trust fund.

Can the asset from the trust be reinvested into another trust after maturity?

Once the trust fund has reached maturity, it is possible to reinvest the fund into another trust or into alternative investment accounts such as an ISA or an offshore account . Both of which have tax benefits.

Can beneficiaries be changed during the time that the asset is in Trust?

This all depends on the type of trust. If the fund is an irrevocable trust this does not permit any changes to be made. However, if the trust is a revocable fund, the settlor can decide to make alterations to the following; the beneficiaries, the trustees or even remove the asset from the trust altogether. A revocable trust will automatically become irrevocable once the settlor is deceased.

Does the HMRC have to be informed about trust funds?

The HMRC should be informed if the tax is expected to receive an income or profits over the coming tax year. Once notified you will receive the Trust and Estate tax form at the end of the tax year.

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Guide Contents

What is a Family Trust?
Why a Trust Fund?
The different types of Family Trusts
How to put assets into a Family Trust Fund
Frequently Asked questions about Family Trusts
Where to get more help and advice about Family Trusts

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