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Different Inheritance Tax rules apply to older trusts set up by 21 March 2006 that meet specified criteria and some Will Trusts. All post\u201321 March 2006 lifetime Trusts of this type are taxed in the same way as fully discretionary trusts for Inheritance Tax and Capital Gains Tax purposes.<\/p>\n
Default beneficiary<\/strong> Significant differences <\/strong> Naming a default beneficiary is no more binding on the trustees than providing a letter of wishes setting out who the settlor would like to benefit from the trust fund. The trustees still have discretion over which of the default and potential beneficiaries actually benefits and when. Some older Flexible Trusts limit the trustees\u2019 discretionary powers to within two years of the settlor\u2019s death, but this is no longer a common feature of this type of Trust.\t\t<\/p>\n","protected":false},"excerpt":{"rendered":" Discretion over which of the default and potential beneficiaries actually benefit These are similar to a fully Discretionary Trust, except that alongside a wide class of potential beneficiaries, there must be at least one named default beneficiary. Flexible Trusts with default beneficiaries set up in the settlor\u2019s lifetime from 22 March 2006 onwards are treated… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"_links":{"self":[{"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=\/wp\/v2\/posts\/3188"}],"collection":[{"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3188"}],"version-history":[{"count":0,"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=\/wp\/v2\/posts\/3188\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.a1-financial.com\/financialnews\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nFor Income Tax purposes, any income is payable to and taxable on the default beneficiary. However, this doesn\u2019t apply to even regular withdrawals from investment bonds, which are non-income producing assets. Bond withdrawals are capital payments, even though chargeable event gains are subject to Income Tax. As with Bare Trusts, the parental settlement rules apply if parents make gifts into trust for their minor children or stepchildren.<\/p>\n
\nWhen it comes to beneficiaries and control, there are no significant differences between fully Discretionary Trusts and this type of trust. There will be a wide range of potential beneficiaries. In addition, there will be one or more named default beneficiaries.<\/p>\n